The kina bought 38.01 Australian cents in May 2025. By September 2026 it bought 31.27 cents, according to Exepreneur’s analysis of Bank of Papua New Guinea mid-rates. The 17.7% fall came against the currency of PNG’s largest supplier of imports.
For an importer, the move runs the other way. One Australian dollar cost K2.63 in May 2025 and K3.20 in September 2026, on the same Bank of PNG figures.
A shipment priced at A$100 in Brisbane now costs about K320 to pay for, up from K263. The increase is 21.6%, before freight, duty or margin.
Some of that cost has reached the shops. Westpac economist Shamal Chand reported in September that headline inflation accelerated to 5.3% in the June quarter. Westpac had put the March-quarter rate at 2.24%.
A crawl built around the US dollar
The slide against the Australian dollar is largely a product of how the Bank of PNG manages the kina.
Since January 2024 the central bank has run a crawl-like exchange rate arrangement under the International Monetary Fund programme PNG entered in 2023, Islands Business reported. The National put that programme at US$918 million. The kina may move within a 2% band, and the crawl is anchored to a single currency.
Deputy Governor Jeffery Yabom told Islands Business in August 2024 that the bank chose the US dollar for simplicity of implementation. He said it would move to a trade-weighted basket of major trading partners’ currencies “in the near future.”
Two years on, the anchor is still the US dollar. Kina Bank’s March 2026 market report said the Monetary Policy Committee had reinforced the crawl at 0.5% a month.
The weakening is deliberate. In June 2025 the committee described gradual depreciation as “necessary to restore PNG’s competitiveness” with its trading partners. In December it said the crawl continued to deliver “a gradual and orderly depreciation of the kina,” aimed at correcting overvaluation.
Against the US dollar, the kina has moved roughly as planned. On Exepreneur’s calculation, a 0.5% monthly crawl compounds to about 7.7% over 16 months. Bank of PNG’s rate for 6 October 2026 put the kina at 22.43 US cents, 4.1% below the 23.38 cents Kina Bank recorded in January.
The Australian dollar did the rest
Western Australian Treasury Corporation’s monthly reports show the Australian dollar averaged US$0.6434 in May 2025 and US$0.7102 in August 2026. The rise was 10.4%, measured against the currency the kina’s crawl tracks.
The two moves account for almost all of the fall. A 7.7% crawl against the US dollar, set against a 10.4% stronger Australian dollar, implies a fall of about 16.4% against the Australian dollar on Exepreneur’s calculation. The measured fall was 17.7%.
Most of the damage came early. Kina Bank recorded the kina at 32.77 Australian cents in February 2026, already 13.8% below May 2025 on Exepreneur’s calculation. A further 4.6% came between February and September.
Interest rates on both sides
Both central banks tightened. Only one move pushed the exchange rate against PNG.
In September 2025 the Bank of PNG raised its Kina Facility Rate from 4.0% to 5.0%, PNG Business News reported. The committee said the increase would help curb “further inflationary pressure caused by the kina’s gradual depreciation.” It has held at 5.0% since, most recently on 8 September 2026, the central bank’s website shows.
Australia’s Reserve Bank followed on 3 February 2026, lifting its cash rate to 3.85%, its first increase since November 2023, Commonwealth Bank reported. The Australian dollar rose to 70.08 US cents after the decision, from 69.39.
Western Australian Treasury Corporation’s August report said stronger-than-expected Australian inflation for July lifted expectations of another RBA increase, supporting the currency.
ANZ’s Pacific senior economist Kishti Sen told The National in May that interest rate differences explained why the kina had fallen faster against the Australian dollar than the US dollar. The weaker kina, he said, was pushing up import costs and retail prices.
Overvalued or undervalued
Sen’s view is that the kina is undervalued against the Australian dollar. He suggested revaluing it to 24 US cents, about 7% above Bank of PNG’s 6 October rate, and said the Monetary Policy Committee “could consider stabilising the Kina to ease affordability pressures.”
The central bank and Westpac disagree. Chand’s June update said the Bank of PNG was maintaining the crawl “as the Kina remains overvalued,” the same reasoning the committee gave in December.
The IMF programme expects more of the same. In May 2025, Dr Thomas Wangi of the PNG National Research Institute told The National that depreciation was expected to continue in the medium term, “in line with the terms of the loan agreement.”
For any company pricing or budgeting in kina, the split is the risk. One reading says the slide should stop. The official reading says it has further to run.
Where the cost lands
Australia supplied 45.6% of PNG’s imports, ranking first, according to the Department of Foreign Affairs and Trade’s latest economic fact sheet on PNG. The United States was second at 18.2%.
Demand has not eased to absorb the higher price. Import growth averaged 15.9% in the first half of 2026, Chand wrote in August.
In the same note he listed imported inflation and kina depreciation, along with food and transport costs, as reasons headline inflation would rise above 5% in the near term. Government fuel stabilisation measures and GST relief were working against that pressure, he said.
The Bank of PNG reads the jump differently. Westpac reported in September that the central bank judged inflation pressures to be largely supply-driven when it held its policy rate.
PNG has been here recently. Headline inflation was 5.3% in the March quarter of 2025 before easing to 3.6% in June, PNG Business News reported in its account of the September 2025 decision.
A weaker kina lifts what exporters earn in local currency. Gold exports to Australia rose 28% year on year to K11.5 billion by July, according to Westpac’s September update. PNG LNG had shipped 5.5 million tonnes by the same point, running at 99.8% of capacity.
Those receipts go mostly to resource companies and the state. Households and import-dependent businesses carry the import bill, and not evenly. Chand noted in June that inflation was running higher in the Highlands than in Port Moresby and Lae.
Dollars are easier to find
The exchange rate is one problem. Getting foreign currency at all was a separate one, and it has improved.
Before the crawl, unmet orders for foreign currency reached US$364 million at the end of August 2023, the Development Policy Centre reported at the time. Chand wrote in August 2026 that shortages had eased considerably, although auctions and central bank intervention were still needed.
Kina Bank put that intervention at about US$200 million a month by February 2026, up 34% on a year earlier, and reported foreign exchange market turnover up 143% year on year.
More supply may be coming. Westpac reported in September that a final investment decision on Papua LNG is targeted for 15 December 2026. The Bank of PNG forecasts 3.5% growth in 2026; Westpac forecasts 4.6%.
The September bounce
The kina has recovered some ground since mid-September, and the move came from the Australian side.
Australia’s currency peaked at 72.18 US cents on 10 September and closed the month at 69.45, a 3.8% drop, according to Pound Sterling Live data. Bank of PNG’s rate for 6 October 2026 put the kina at 32.21 Australian cents, 3.0% above the September level in Exepreneur’s analysis.
Against the US dollar, the kina kept weakening over the same month, Trading Economics data show.
Even after the bounce, the kina is 15.3% below its May 2025 level against the Australian dollar. An importer still budgeting at last year’s rate is paying about K3.10 for every Australian dollar, not K2.63.
What sets the next move
The Monetary Policy Committee sets the crawl. The Reserve Bank of Australia sets the other half of the equation, and PNG has no say in it. Until the Bank of PNG moves to the trade-weighted basket Yabom described in 2024, every gain in the Australian dollar against the US dollar lands in full on PNG’s largest import bill.
The September-quarter CPI will be the first official price reading to cover the kina’s drop to 31 Australian cents. The June-quarter figure, recorded before that drop, was already 5.3%.
