PNG KINA STRONG AGAINST U.S., AUSTRALIAN DOLLAR

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By Baeau Tai

PORT MORESBY, Papua New Guinea (The National, Jan. 2) – The Papua New Guinea kina has performed strongly against the U.S. dollar and Australian dollar in the first nine months to September last year.

In the past nine months, the kina appreciated by 2.9% and 3.4% against the US dollar and the Australian dollar respectively.

Treasury Economic Monitors for September 2006, a publication by the Treasury Department, said the continuity in appreciation of the kina reflected both an increase in the terms of trade from higher international prices of PNG’s major commodity exports and lower inflation reflecting better management of the budget by the National Government.

Since late 2004, the terms of trade have increased by more than the exchange rate.

In 2005, while the export price index increased by 19.7%, the US dollar exchange rate only appreciated by 3.9%.

ANZ Bank said the kina came under a "bit of pressure" and closed the year slightly lower.

"After playing an active part in supporting the kina for months on end, the Central Bank chose not to intervene and let supply and demand forces determine the level of the kina," ANZ said.

The Central Bank said in its Quarterly Economic Bulletin for the September quarter of last year that higher international prices for mineral, some agricultural, logs and marine exports more than offset the appreciation of the kina against the US dollar.

This resulted in a 48.1% increase in the weighted average kina price of exports in the September quarter of 2006, compared to the corresponding quarter of 2005.

There was a 59.7% increase in the weighted average price of mineral exports, with higher kina prices for all mineral exports.

For agriculture, logs and marine product exports, the weighted average kina price increased by 3%.

This was accounted for by higher kina prices for cocoa, tea, rubber, logs and marine products.

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