The value of the pa'anga against the U.S. dollar has halved over the past 2 decades, from 0.9859 to the U.S. dollar in 1982 to 1.997 in February 2001. Much of this devaluation took place during the early 1980s, and then again in the late 1990s. During the 1980s, the export value
|Trade (expressed in billions of US$): Tonga|
|SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999.|
|Exchange rates: Tonga|
|pa'anga (T$) per US$1|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
of coconut products and vanilla declined, and remittance income fluctuated, causing an impact on the currency. In the late 1990s and early 2000s a further serious devaluation occurred, and this may be partly attributed to the strong American dollar against the currencies of the Pacific region, including the New Zealand and Australian dollars, which are part of a number of currencies to which the pa'anga is linked.
The National Reserve Bank of Tonga (NRBT) has several functions. One of these is to stabilize the Tongan currency. This is only possible, though, within the network of the other currencies to which the pa'anga is linked. The NRBT also monitors the economy by maintaining databases and providing advice on government spending and revenue, the supply of money, interest rates, and the trade balance.