Wednesday, April 15, 2009


On April 15, the Fiji Reserve Bank has devalued the Fiji Dollar by 20%, effective immediately.
Concurrently, it has established a series of measures aimed at preventing capital flight.

Prima vista, this is great for the Tourism Industry.
Based in foreign currency, prices for a holiday in Fiji have just dropped by 20% and that may indeed lead to an increase in demand.
Great for you, our valued customer!

Question is, is it good for us?

Common wisdom has it that a currency devaluation will automatically trigger domestic Inflation - especially in an Island Country like Fiji which is heavily reliant on imports, foremost of which Oil products but also essential goods like milk, butter, meat, flour and canned food.

BADs principal outlays are our fuel bill and the wages of our 15 wonderful staff.
I expect fuel prices to rise very shortly indeed. That may well mean that we will be forced to re-instate our fuel surcharge after having repealed it at the beginning of the year.

Regarding the other price hikes, they are likely to be inevitable once new stocks are being brought in. As most prices are controlled by the Prices and Incomes Board, I expect that to gradually eventuate during the present month.
Once again, we will have to monitor the situation but it is quite apparent that our staff, and their families, will end up being at the receiving end of these unexpected developments. If so, it is our ethical imperative that we will need to raise wages - and accordingly, our prices which are expressed in Fiji Dollars. For our foreign currency based clients, this will very likely still amount to a price reduction, albeit not by the full 20%.

Please keep watching this space.

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