The last thing Fiji wants is pressure on its foreign reserves in a period when there is instability and high inflation.
Reserve Bank of Fiji (RBF) governor Ariff Ali made the comment at the State of Economy breakfast event at the GPH in Suva yesterday, explaining the central bank’s stand on its exchange control policy, aimed at ensuring adequate foreign reserves.
He said the International Monetary Fund’s (IMF) standard benchmark was three months of import cover, to which he said the RBF would like four months; and added that over the last 25 years, he had seen a number of times when reserves had been under pressure, citing the political crises in 2000 and 2006, 2008 and the COVID pandemic.
Mr Ali said if oil prices rose from $60 to $100, Fiji would lose almost $500 million or more in terms of foreign reserves.
He said if import prices increased, Fiji would lose and optimism would be affected.
“The last thing we want in a period when there’s instability, when there’s high inflation, there is pressure on our foreign reserves and with this pressure on foreign reserves, what happens? We’ve seen it in 1987, we’ve seen it in 1999, we’ve seen it in 2009, we devalue the currency,” Mr Ali said.
“So, as much as I have to disappoint some people in terms of exchange control, this is important because we need to protect the 900,000 people that we need to protect. We need to protect the businesses.
“And related to this is the issue with the monetary policy stance. Over the last four years, we’ve had a very accommodative monetary policy. Our interest rates are at historical lows. Our policy rate is at 0.25 per cent.”
Mr Ali said the IMF had suggested the RBF to raise interest rates from 0.25 per cent to four per cent, and more recently three per cent, but added they knew the needs of the people.
“So our view is in a period when the economy is slowing down, in a period when inflation is almost negative, in a period when we see growth in the foreseeable future even lower, and when a foreign reserve is higher, we feel the current monetary policy stance is appropriate.
“Directly associated with the monetary policy stance is the level of foreign reserves. If there is pressure on our foreign reserves, what happens is liquidity also dries up, and if liquidity dries up, what happens is we suffer pressure on interest rates just from the market.
“So we feel it is important, given the challenges and risks that we see, that we maintain this current monetary policy stance to support the economy.”
In its February 2026 economic review, the central bank reported foreign reserves remained adequate at around $3.6 billion, sufficient to cover 5.2 months of retained imports, and projected to remain sufficient over the medium term.
