Latest figures from the Reserve Bank of Fiji show that the Fiji dollar's purchasing power continues to decrease.

The Reserve Bank of Fiji Economic review of the month of August shows that that the Real Effective Exchange Rate Index for the Fiji dollar raised by 5.3 percent in the year to July and the increase over the years indicates the worsening of the Fiji dollar's power internationally.

The Bank said this is attributed to the higher domestic inflation outcomes. However there is some good news as till the end of July the inflation rate has decreased from 7.1% to 6.4% with lower costs for food items, clothing, footwear, alcoholic drinks and tobacco.

The Sugar industry is also not performing as expected with a decline of 7.9% in cane crushed for the first two months of the crushing season resulting in an annual decline of 10.5 percent in sugar production.

The Bank than goes on to say the trade data for the first half of 2007 showed merchandise export earnings rise by 7.3% compared to a decline of 7.2% for the same period last year. This, the bank said was high because of seasonal factors.

However, the RBF said investment demand continues to exhibit weakness and the labour market remains subdued in the seven months of this year with a 10 percent drop in hiring intentions during the review period.


It has also been revealed that merchandise imports declined by around 7.4 percent, when compared to a growth of around 17.3 percent in the corresponding period in 2006.

The Reserve Bank said official Foreign reserves at the end of July stood at $877.3 million, sufficient to cover 4 months of imports of goods.