Wellington - The central bank of Fiji, where the military government rules under emergency powers, devalued its currency by 20 per cent on Wednesday, warning citizens that the move would increase inflation. A statement from the Reserve Bank in the capital Suva said a rise of about 20 per cent in the Fijian dollar's value over the last year was unsustainable and the devaluation was needed to lift exports and boost tourism.

Both sectors are critical to the Fijian economy which has been hard hit since a military coup overturned the elected government in December 2006.

The governor of the Reserve Bank, Savenaca Narube, was sacked on Tuesday after predicting that the economy was worsening and his deputy, Sada Reddy, was appointed to the position Wednesday.

The bank statement said inflation was expected to rise immediately but would subside in the next 12 months.

"The Reserve Bank is asking all sections of Fiji's community to bear the burden of adjustment so that our economy can recover quickly and start to generate much needed employment," the statement said. (dpa)