Fiji Devaluation Coming?

I've heard rumors that Fiji will devalue its currency, the Fiji dollar. This would certainly compensate for inflation caused by increasing taxation, higher fuel prices, and cost-of-living raises to civil servants. Fiji is also beset by rising interest rates and debt. A devaluation would be painful but it would make the country more competitive.

On my recent visit I noted how hotel prices had jumped around 25 percent since 2004, in part due to a new three percent hotel bed tax imposed by the Fiji government earlier this year. Many things related to foreign tourism are becoming expensive in Fiji, although the country is still much cheaper than French Polynesia where the Pacific franc is tied to the Euro.

French Polynesia could become even more expensive if France decides to scrap the Pacific franc altogether. As happened in Europe when the Euro was introduced there, many businesses in Tahiti and its islands will take the opportunity to round their prices up - a guidebook writer's nightmare! Of course all of this is only speculation, but a 20 percent devaluation in the value of the Fiji dollar before the end of this year wouldn't surprise me at all.

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