Crackdown in Fiji underway: McCully

23:01, May 23 2009

A military crackdown is underway in Fiji and the country is now at an unpredictable stage, Foreign Minister Murray McCully told reporters.

He confirmed an earlier report that soldiers have entered the Reserve Bank of Fiji (RBF) Building which also hosts the New Zealand High Commission.

"People coming and going are being checked," Mr McCully said.

"We understand there is some kind of action being taken against the (RBF) Governor (Savenaca Narbue)." 

He said the Fiji economy was in serious strife even before the Easter Weekend events and the military did not understand the role of the central bank.

He said occupying the bank and seizing Mr Narbue was "an act of vandalism".


"Things have reached an unpredictable stage, some sort of crack down is underway," Mr McCully said.

"We have a volatile situation on our hands."

New Zealanders needed to think "long and hard" about visiting Fiji.

"We are entering a realm of unpredictability in the behaviour of the administration there."

It was not a "riskless exercise" to visit Fiji and "New Zealanders should be quite careful about going to Fiji."

Earlier today the RBF issued a statement in which RBF deputy governor Sada Reddy said it has "tightened exchange controls with immediate effect."

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.