Fiji's Reserve Bank Governor Sada Reddy has defended himself against criticisms he had a hidden agenda when he devalued Fiji's currency by 30 percent in April.
In an unusual move the normally tightlipped Reddy gave a series of interviews with the local and overseas media in response to criticisms, including from bloggers, of his handling of RBF policies since he moved into the new position.
“There is nothing hidden in our figures. We publicise everything. Every cent is accounted for. We are audited. We’ve got nothing to hide,” he said in an interview with Fijilive.
“I had no option. If we would have gone any further, we would have suspended all foreign currency transactions; that means we would not be able to buy anything from overseas. Nothing, zero. We would have suspended everything for a few weeks. That means no fuel imports and the airplanes would be parked. A lot of people say there was no need to devalue the currency and we could have applied exchange controls – forget it. We would not have gone anywhere.”
Last week Reddy said in a statement that foreign reserve levels had hit the $1 billion mark, equating it 3.5 to 4 months of cover.
Reddy also explained to Fijilive why the devaluation was by 20 percent and not lower, saying it was a calculated judgment call aimed at quelling all speculation about the future of the Fijian currency and therefore stabilising all outflows of reserves.
“If for instance I had devalued the currency by 5 or 10 percent, the speculation about another devaluation would have continued and people would have continued to move funds out of the country. I have worked in the previous crises and I know how to stop this psychology. I know from experience that even 10 percent would not have killed it. I needed to do a pretty hefty one and see how things settled down.”
“When we devalued there was a $100 million increase in reserves and the chart continued to go up. It is important that people understand that if, after devaluation the chart had gone up and started coming down, it would have been a very difficult situation. But fortunately the policies worked and let me say I was myself surprised at the speed with which it turned around. A lot of it was speculative. You have no idea how much money leaks out of the system," he told Fijilive.
Reddy has ruled out the possibility of a further devaluation or a revaluation of the Fiji dollar.