When a government pegs its exchange rate to another currency, pledging to do whatever it takes to ensure that the peg holds, domestic and foreign investors tend to minimize the exchange rate risk, as long as things are going well. The problem with a fixed, but adjustable, exchange rate is that it does not guarantee that a currency will not decline in value.
Our records show that of this total, the 15 largest business loans from each of Fiji’s four commercial banks make up close to 60 percent, while lending to micro businesses and SMEs account for just 8 percent. There is definitely room for this to grow.