22 Jun 2011

Appreciation of Solomon Islands dollar an unusual move: economist

6:48 pm on 22 June 2011

An economist at the University of the South Pacific is describing the appreciation of the Solomon Islands currency as an unusual move for a developing economy.

A five percent rise in the value of the Solomon Islands dollar took effect last week.

The finance minister says the revaluing was a result of discussions with the International Monetary Fund and the country's Central Bank about how to combat inflationary pressures.

But Dr Sunil Kumar, the senior lecturer at the USP's School of Economics, says there are other ways of achieving that.

"This kind of blanket policy's very rare for developing economies. I think the issue of food security, the issue of food distribution, these are some of the things where the government could take action and the effect of inflation could be mitigated in that way instead of appreciating the dollar."

Dr Sunil Kumar says an appreciation of five percent isn't too serious but it would be a concern if the government revalued the currency again.