|Foreign exchange (FX) is an important tool for investors to diversify and manage risks, as it provides the ability to protect investments from changes in the value of currencies. It is important to note that Super Funds don’t hold FX purely for trading or speculation. Here are some of the reasons why foreign exchange is important for investors:|
Papua New Guinea Context
As a heavily import dependent economy, PNG relies on the availability of FX for the acquisition of essential goods from overseas. If we can’t get these essential goods, we can expect a rise in inflation. For PNG investors, steady FX is also crucial to maintaining successful business ventures, supporting development and entering into new investments as it allows for the purchase of goods and services not available in-country.
Investing in FX means investing your money into other countries’ economies instead of just your own country. By spreading your money across different countries and currencies, you are not putting all your eggs in one basket. This helps protect your money from changes in one Country’s economy or currency. It is like making more than one garden in different locations, if anything happens to one, you will still have food for your family.
Why super funds need FX
As an investor, one of the biggest challenges NSL faced in 2022 and now in 2023, is the limited availability of foreign currency being released to businesses and investors in PNG. This limits NSL’s ability to make further strategic investments for our Members at this very opportune time when we should be securing shares in more high-value off-shore investments that are available at lower purchase rates.
The limited availability of foreign currency is also constraining the trading and growth prospects of local businesses that Super Funds own resulting in lower dividends than they should otherwise.
Why Superannuation Funds are good for the PNG Economy
Support economic stability The purpose of superannuation funds is to encourage Members to save now so they can enjoy a dignified and comfortable retirement in the future. Every year, Nambawan Super injects a large sum of money into the PNG economy through benefit...