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Increased BPNG FX intervention boosts FX market turnover in Q4 2023

Thursday, February 8, 2024

Foreign Exchange (FX) market turnover in the December quarter rose 21.4%, from the September quarter to K14.5 billion, supported by increased FX intervention (K1.9 billion) from the Central Bank (BPNG).

BPNG FX intervention provided 25.5% of FX inflows to the market in Q4, according to BSP Financial Group’s Quarter 4 of 2023, Pacific Economic & Market Insights report.

BSP’s Group General Manager Treasury, Rohan George says FX inflows over the December Quarter from BPNG and BSP’s Top 5 exporters reduced BSP Customer Outstanding FX Orders by K942 million to K205 million at the end of 2023. “As a result of this, FX order execution times were shortened with “National Interest” orders being prioritized over other orders and trade and service orders over capital orders,” George explains.

He goes on to state that the increased BPNG intervention helped reduce the continuing structural imbalance between FX inflows and outflows. “In 2023, FX inflows rose 18% to K25.6 billion with BPNG supplying 22.2% (K5.7 billion) of the 2023 PNG FX inflows, BPNG FX intervention increased by 84% (K2.6 billion) and FX inflows from exporters and others grew by 6% (K1.3 billion).

“We anticipate FX orders moving towards previous highs in Q1-24, due to lower FX inflows from exporters and business post-Christmas restocking,” George further adds.

FX customers are encouraged to place orders early, with correct documentation to avoid any unwanted delays.