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Fiji’s foreign reserves has reached a new milestone thanks to the devaluation of the Fiji dollar and other measures put in place by the central bank five months ago.
The Governor of the Reserve Bank, Sada Reddy, announced today that Fiji’s foreign reserves reached F$1 billion as at September 22, 2009, according to a Government statement.
He said the current level of foreign reserves now equates to around 3 to 4 months of imports (goods and non-factor services).
“This was an extraordinary achievement as 6 months ago foreign reserves fell to a critical level of around 1 month of import cover,” he said.
He attributed the strong recovery put in place by the RBF in mid-April 2009, which had an immediate impact.
Reddy is confident Fiji has reached a comfortable position that would create more confidence in the economy and financial system.
However, Reddy is wary of the risks to small open economies such as Fiji.
He said Fiji needs to continue to put in measures to buffer the foreign reserve with the RBF looking at raising the benchmark foreign reserves import cover to 5 months rather than 3 months as in the past.
He said the experiences of the past shows the 3 months import cover is inadequate for Fiji.
