USD to Remain Key Despite Yuan Options, Says Bank of PNG

 Papua New Guinea will continue to rely on the United States dollar (USD) as a major currency for international settlements despite growing options to transact in Chinese Yuan (CNY), according to Bank of Papua New Guinea Governor Elizabeth Genia.

She said PNG’s commercial banks have already started quoting prices for buying and selling in Yuan, allowing businesses more flexibility when dealing with overseas partners, particularly those in China.

Governor Genia explained that the availability of Yuan through local banks would benefit companies importing goods from China. She noted that businesses could directly pay Chinese exporters in their home currency, reducing transaction barriers and improving efficiency in trade settlements.

USD to Remain Key Despite Yuan Options, Says Bank of PNG/Photo : Downtown Port Moresby/File Photo

“The advantage of being able to source CNY locally through a PNG bank is it allows businesses to pay Chinese exporters in their home currency,” she said.

She added that exporters in Papua New Guinea could also exchange Yuan within the country’s foreign exchange market and receive payment in Kina, stressing that this development does not reduce the role of the US dollar in the economy.

Institute of National Affairs executive director Paul Barker said trading in Yuan was possible, although the financial systems to support such transactions were still developing. He said alternative mechanisms, including barter arrangements and the rise of cryptocurrencies, had also been used in some cases.

“As time goes by, and demand increases, arrangements will be formalised by commercial and regulatory institutions,” he said.

Mr Barker noted that the Euro remains the second-largest currency in global trade, while China, as a major exporter and one of PNG’s key trading partners alongside Japan and Australia, could see more transactions shift toward the Yuan over time.

“China is already providing extensive international lending which is Yuan denominated, and therefore repayable in their currency,” he said.