FIJI’S foreign reserves stood at $2.18 billion as of August 31 sufficient to cover five months of imports and are forecast to remain at comfortable levels by year end.
According to the Reserve Bank of Fiji’s Economic Review for the month ended August 2018, the country’s foreign reserves rose over the month of July to $2.16 billion, sufficient to cover 5.0 months of retained imports of goods and non-factor services (MORI).
Foreign reserves are predominantly maintained in the currencies of the Fiji dollar basket, namely the US, Australian and New Zealand dollars, the Japanese Yen and the Euro.
The RBF also holds IMF Special Drawing Rights and minimal portions of gold and the British Pound.
Foreign reserve assets are important to ensure flexibility and resilience to central banks. If a currency crashes or is devalued, central banks has other currencies to help them withstand such markets shocks.
The rise in foreign reserves over the period also led to the increase in the country’s banking system liquidity.
The review noted that the banking system liquidity, measured by Banks Demand Deposits, remains adequate and rose over the month of July by 5.7 per cent to $496.9 million, led by increase in foreign reserves (+$22.8m).
As of August 28, Fiji’s banking system liquidity remained adequate at $504.2 million.
Private sector credit also expanded by a lower 5.6 per cent on an annual basis in July, led by a slow down in commercial banks’ lending to the private sector business entities.
Over the month, commercial banks’ weighted outstanding lending rate and weighted average new lending rate both declined in July to 5.68 per cent and 5.80 per cent while the commercial banks’ new time deposits rate rose to 3.51 per cent.
