No Devaluation: Governor Ali

Our current level of foreign reserves… well above the international benchmark, he adds.
01 May 2019 18:46
No Devaluation: Governor Ali
Governor of Reserve Bank of Fiji Ariff Ali

The total buffer that the Reserve Bank of Fiji (RBF) holds is in excess of $1 billion, says the Governor of the Reserve Bank of Fiji.

Ariff Ali made the comments during a seminar organised for the Nadi business community at the Tanoa International Convention Centre, Nadi, on Monday night to dispel rumours of the Fijian dollar being devaluated.

“I don’t lose any sleep over it,” the Governor said amid rumours that a devaluation was inevitable.

Mr Ali said the country’s foreign reserves position was more than adequate.

He stressed the current level of foreign reserves, which was slightly below $2 billion, was well above the international benchmark of three months of import cover.

“This despite the adverse global conditions where growth has been weakening, higher prices for crude oil and below par performance of some of the traditional exports sectors,” he said.

“Moreover, the strong external position has been achieved on the back of nine years of consecutive economic growth never achieved in Fiji’s history.

“More importantly, growth in the past five years has been almost twice Fiji’s historical growth rate. Underpinning the strong external reserves is the income from tourism which hit a new record of $2 billion in 2018 supported by a new high in personal remittances.

“Complementing this, foreign reserves have been positively supported by strong exports of mineral water and foreign direct investment flows.”

Mr Ali stressed that apart from the foreign currency reserves that RBF holds, it had access to over $1/2 billion foreign currency assets or investments held by other institutions that the RBF approved.

“These foreign currency investments can be called backed if the need arises. Hence, the total buffer of foreign reserves that the Bank holds is in excess $1 billion,” he said.

“Therefore, it makes no sense for RBF to devalue. No devaluation is good as it makes everyone poor overnight and the poor become poorer.”

A participant suggested the Governor conduct a roadshow, including one for the Members of Parliament.  Another participant said that based on the data and facts presented by the Governor, the country was in good hands.

“It was very revealing that foreign reserves level was well below the international benchmark from 2005 to 2008 despite millions of FNPF funds recalled to bolster reserves,” Mr Ariff said.

The Governor reiterated that no FNPF funds have been recalled in almost 10 years and the current levels of reserves did not necessitate it.

Edited by Naisa Koroi

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