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The Tongan Pa’anga fell to its lowest exchange rate against the New Zealand Dollar (NZD) since 2014, with one pa'anga buying less than. 5808 NZ cents Monday - and falling to possibly its lowest rate ever against the NZD.
The ANZ- Tonga bank confirmed that Monday's rate is the bank's lowest selling rate for the NZD since 2014.
The National Reserve Bank of Tonga commercial exchange rates reported today include NZD selling rates between .5779 and .5808 against one Tongan Pa'anga.
The Tongan Pa'anga has been in a steady decline since the impact of the CoViD-19 restrictions started in 2020.
The devalued Tonga Pa'anga means that imports, which Tonga heavily relies on, are becoming more expensive.
Alfred Cowley, who operates the biggest bakery in Tonga said with the pa'anga dropping in value against its biggest trading partner New Zealand, they are finding it difficult to make a profit.
“The problem we face as a bakery is 99% of our ingredients are imported, [the] only raw material we have locally is water.”
“With the Tongan dollar weakening nearly every month, we are finding it hard to bake bread at a profit, as our raw materials are increasing monthly through the weakened Tongan pa’anga.”
He said they have looked at importing from other countries, but logistically Australia, New Zealand and Fiji are still better, and the quality of Asian raw materials “is not the best, when compared to Australia, NZ, and Fiji”.
“One way we are trying to cheapen our raw material prices is by bulk buying. One of the downsides to this, it ties up a lot of our cash flow, another is it must be forecast carefully as all raw material has a use-by date,” he said.
Local Tongan businessman, John Paul Chapman, said they adjust their pricing based on exchange rate changes, as a matter of policy. He imports building materials, and duty free products.
“We already import from a variety of countries. However, New Zealand is still our largest supplier so there will be expected price increases due to the shortfall.”
“You would expect some major products in Tonga to feel this effect will vary from cement, timber to items such as butter and milk.”
The hospitality industry is feeling the impact of the weakening pa'anga on the food and beverage sector. This is all they have left after incoming tourism has been prohibited for nearly a year, under the Covid border restrictions.
“We are caught between a rock and a hard place,” said one restaurateur. “All we have now are the local customers and if we raise our food prices we will lose them too!”
Parents in Tonga who are supporting students and family stranded in New Zealand by the CoVid-19 border restrictions in Tonga, are also feeling the strain of the weaker pa'anga.
On the other hand, it is a good time to remit money from New Zealand to Tonga, as the stronger NZD will buy more TOP.
SOURCE: TONGA WIRES/PACNEWS
Pacific Islands News Association
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