Fiji hit by currency crisis

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Fiji’s currency is in crisis as the military occupy the country’s central Reserve Bank (RBF), housed in the same building as the New Zealand High Commission, and have Governor Savenaca Narbue under arrest.

In a brief statement a short time ago the RBF deputy governor Sada Reddy said the bank has "tightened exchange controls with immediate effect."

Sources who cannot be named for fear of their safety say a major currency run is underway with hard exchange fleeing the country.

Sources say the New Zealand High Commission offices, which are a floor below the governor's office, have not been entered by the military.

Mr Narbue has been loudly warning Fiji that its economy is in major strife and on Thursday he announced the domestic economic would contract this year by 0.3 percent as against a projected 2.4 percent.

He said Fiji's official foreign reserves were F$674 million, equivalent to 2.7 months of imports of goods.

Fiji normally has reserves of around five to six months.

Mr Reddy's statement said the controls - which are not defined in the statement - was is in line with one of the bank's core objectives of safeguarding our foreign reserves.

"Some of these changes include suspension of facilities while application for other facilities by customers will require the approval of the Reserve Bank," Mr Reddy said.

"Certain transactions will continue to be delegated but at lower limits."

BNZ senior currency trader Danica Hampton says the RBF move to tighten exchange rate controls is likely to have been put in place to prevent capital flight.

"But details are sketchy at present, and it's difficult to make any conclusive analysis right now," Hampton warned.

"The moves this morning ultimately reflects the ongoing political tensions in the country which have escalated over the last couple of days."

Hampton told Businessday the Reserve Bank of Fiji's move was significant for Fiji itself, but was unlikely to have much of an effect on the New Zealand dollar.

"It's [Fiji] is such a small driver of currency that we are unlikely to see a any wholesale flight to safety for the Kiwi dollar."

One New Zealand dollar currently buys 1.03310 Fiji Dollar.

The martial law crackdown comes as TV3 reporter Sia Aston and cameraman Matt Smith, and Australian Broadcasting Corporation correspondent Sean Dorney, were deported and are currently flying to Auckland.

A Fiji TV reporter, Edwin Nand, who interviewed Mr Dorney as he was being deported, has been arrested and is in custody.

Ms Aston and Mr Smith were allowed to stay in a Nadi hotel last night but Mr Dorney was held at the immigration detention centre.

As he missed a flight to his Brisbane home its understood he has been deported to Auckland.

Meanwhile Foreign Minister Murray McCully says New Zealanders should think twice about visiting Fiji.

He has also raised the possibility of travel and trade bans to the troubled Pacific nation but said they were not preferred options.

The latest turmoil in Fiji was prompted by its Court of Appeal ruling last Thursday that Commodore Voreqe Bainimarama's regime, in power since staging a 2006 coup, was illegal under the country's 1997 constitution.

In response, the country's ailing 89-year-old President Josefa Iloilo sacked the judges, dissolved the constitution, ruled out any election for five years and briefly removed Cdre Bainimarama before re-appointing him as prime minister.

Sources who cannot be named for fear of their safety say the military has moved into the Fiji Reserve Bank building and the home of governor Savenaca Narbue.

It's understood he has been removed and maybe under arrest.

Sources say the New Zealand High Commission offices, which are a floor below the governor's office, have not been entered by the military.

He has been loudly warning Fiji that its economy is in major strife and on Thursday he announced the domestic economic would contract this year by 0.3 percent as against a projected 2.4 percent.

He said Fiji's official foreign reserves were F$674 million, equivalent to 2.7 months of imports of goods.

Fiji normally has reserves of around five to six months.

Sources say there is now a real fear that the last of the reserves will flee this week.

- © Fairfax NZ News