IMF urges Bank of Papua New Guinea to depreciate currency
Fund offers words of warning to island nation over exchange rate woes
The Bank of Papua New Guinea’s reluctance to allow the local currency to depreciate has harmed the country’s flow of foreign exchange, according to a recent report published by the International Monetary Fund.
According to IMF staff, the central bank has been “reluctant” to allow the kina to depreciate “out of concern for the inflationary impact of depreciation and limited supply and demand responses to depreciation”.
However, supporting the currency, in conjunction with forex rationing, has
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