#header-inner img {margin: 0 auto !important; #header-inner {text-align: Center ;} Fiji Coupfourpointfive: Economist says devaluation was 'overdue'

Wednesday, April 15, 2009

Economist says devaluation was 'overdue'

An Australian based economist says the devaluation of the Fiji dollar by 20 percent was long overdue.

Satish Chand, from Australia's University of New South Wales, says the pressure for a devaluation of the Fiji dollar was eminent since early 2006.

"The haemorrhaging of foreign exchange reserves held by the RBF over the past three years was at least partly due to an over-valued currency. Political instability in the interim has only exacerbated the pressure on the local currency. The last devaluation, thus, was only a matter of time," Mr Chand said.

He said the Fiji dollar was over-valued by at least 12 percent in 2007 and the current devaluation may restore the balance.

However he said the devaluation will hurt househoulds and raise inflation.

"Workers, those dependent on their savings, the retired, and the destitute will face the full brunt of the devaluation. Higher prices for imports will hurt consumers on two fronts. First, their incomes will now afford a smaller bundle of goods and services than before. Those who have lost jobs will now suffer the double whammy of higher inflation and lost income."

Mr Chand said Fiji now needed to reassure tourists that Fiji remains a safe and secure destination to visit as the devaluation gave Fiji's tourism a competitive edge.

1 comment:

Anonymous said...

Never mind the tourists. What of the hike in prices of consumer goods heaped on top of the nagging poverty and rampant unemployment; Iloilo,Voreqe and their thieving interim crooks are OK pilfering the govt. coffers. Is it still wrong for ordinary folks to now steal from their neighbours?