Originally Posted by
tail wheel
The Kina value is regulated by the Central Bank. It's true value if floated is estimated to be approximately 20% less than the current exchange rates. The PNG Government regulates the Kina value to avoid a significant increase in repayment of off shore debts.
Exactly why they are heading for a crash. The Argentinians had their peso pegged at USD1.00 when I was there around 2000, and the whole house-of-cards collapsed when they simply couldn't meet their debts. What I object to is Canberra giving them loads of 'aid', when the Chinese, very wisely, structure their 'aid' as loans. PNG looks at the western sources of aid with a near cargo cult mentality, but they can't pull that one with the Chinese!