Weak Currency Orders: Fleming

BY MELISHA YAFOI

The sharp and rapid increase in fuel prices over the past 6 months and the distribution of pending foreign exchange orders are now weighing much more heavily on fuel importers.

BSP Financial Group chief executive Robin Fleming told this newspaper.

Mr Fleming was answering questions about the country’s foreign exchange backlog, which is impacting the country’s main fuel supplier, Puma Energy.

He said that with generally constant currency inflows, import demand caused by global fuel prices by suppliers such as Puma is now starting to outpace the currency inflow.

“If commercial banks allocate more foreign exchange to Puma, other importers may wait longer for their import demands to be met,” he said.

“Total FX orders with BSP are around K420 million, which is similar to the total open orders at this time last year.

“Overall inflows increased in the last quarter of 2021, however, the first quarter of 2022 was slower from an exporter’s perspective, which means that the foreign exchange available to importers is lower, which is typical for the first quarter of each year.

Mr Fleming said all commercial banks are free to allocate their own inflows and this is often based on overall banking relationships and total order amounts with the commercial bank.

“BSP is trying to split the influx between its large corporate, retail and SME customers, and BSP has the most of these customers in the country as well as major international importers.

“The payment of foreign exchange to importers always depends on the level of inflows from the smallest number of exporters,” he said.

“BPNG provides currency to the market on a monthly basis and these interventions are available for commercial banks to use at their own discretion without guidelines.

“Foreign exchange reserves remain high but the management of these reserves should always be managed with caution.”

Mr. Fleming noted that at present, domestic kina liquidity remains elevated and this could be the case for several months as government spending begins to pick up as the 2022 budget initiatives are implemented.