No link between liquidity and devaluation: RBF
March 12, 2019 7:13 am
Reserve Bank Governor Ariff Ali has clarified that there is no link between liquidity and devaluation, and neither are they connected to one another.
Ali says currently the RBF has over $2billion in foreign reserves.
He says the International Monetary Fund’s benchmark is three months of import cover which equates to close to $1.5billion.
The Governor says this means the RBF has around $1billion additional reserve than what the IMF benchmark is.
He adds there is no need to devalue the Fijian dollar.
“The level of liquidity is something that we influence or we manage and we decide whether it should be high or low. With regards to devaluation our foreign reserves as of today would be just below two billion dollars. We also have somewhere around $530m sitting with other institutions like the FNPF, some of the large cooperation because they are able to hold foreign currency. So the combined total of all our foreign reserves is $2.5b.”
The Governor also clarified that RBF manages liquidity on a daily basis and currently it stands at around $300million.
He says if they feel there is not enough liquidity, they could then withdraw money from the system to set it right.