Please note that with immediate effect the BPNG has instructed the Authorised Foreign Exchange Dealers in PNG to quote United States Dollars (USD) against Kina (PGK) foreign exchange transactions within 75 basis points either side of the trading band Reference Rate.
FREQUENTLY ASKED QUESTIONS:
- What does this mean?
Effectively this is an increase in the current value of the kina and all trades must be done within the prescribed 150 point band. Initially this will mean that Authorised Foreign Exchange Dealers must buy and sell USD against Kina between 0.4055 and 0.4205 (i.e: 0.4130 + / – 75 points – a total of 150 points).
- Do I need to change the way I deal?
No. Your existing arrangement with BSP still holds.
- Is there a maximum amount that I can trade?
Yes. Deal size may be limited by credit limits and transaction limits. Our advertised buy and sell rates (sometimes referred to as our carded rates) are currently firm up to PGK50,000 but BSP reserves the right to change this PGK50,000 transaction limit without notice. On line business banking and personal banking via www.bsp.com.pg will continue to operate as usual. Transactions larger than this are referred through the usual channels to BSP Treasury.
- What about liquidity conditions
Short term liquidity may be adversely impacted as customers get used to the new levels and BPNG has provided assurances that they will be monitoring the situation. For an orderly market to function there needs to be a balance between the buyers of foreign currency (importers) and the sellers of foreign currency (exporters).
- What about forwards?
Existing forward exchange contracts still stand with both parties bound by their legal obligations to deliver or take currency in exchange for Kina at the contracted rate on the value date. The BPNG has requested that the market refrains from entering into new forward foreign exchange arrangements to sell foreign currency to importers. Clients who wish to sell foreign currency forward (exporters) do not currently face the same restrictions.
- Is there any change to my foreign currency account (FCA)?
No. These will continue to operate in the same way
- What happens if the Reference Rate changes?
If the BPNG Reference Rate changes, the trading band will adjust accordingly. For example if the BPNG Reference Rate drops to 0.4000, the Authorised Dealers will be obliged to buy and sell USD against Kina between 0.3925/0.4075.
- What about non USD e.g. PGK/AUD?
We will continue to quote these with the PGK/USD leg priced in accordance with the new trading band
- Is there any other changes to Bank Papua New Guinea foreign exchange controls?
No. The exchange controls under the Central Banking Regulation remain unchanged.
- Will the BPNG review the trading band?
We are advised that BPNG will review the trading band in the next three to six months.
- What if I have further questions/issues?
We will update this Q & A periodically and load to www.bsp.com.pg website.
Please contact your BSP representative directly or email email@example.com if you have additional questions.