Tag Archives: central bank

Uzbek CB introduces new bank note

AUG. 14 2017 (The Bulletin) — Reflecting sharp inflationary pressures, the Uzbek Central Bank said that it was going to introduce a 50,000 soum banknote. In June, in a rare statement, the Central Bank said that rising inflation had forced it to increase its key interest rate to 14% from 9%. Earlier this year it introduced a 10,000 soum note. The 50,000 soum note is equivalent to $12 on the official exchange market and around $6 on the unofficial market.

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(News report from Issue No. 340, published on Aug. 20 2017)

Kazakh CB to bail out commercial banks

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AUG. 10 2017 (The Bulletin) — Kazakhstan’s Central Bank will write off bad loans held by the country’s commercial banks worth $1.8b to $3b through a bond purchasing programme, Olzhas Kizatov, head of its banking sector supervision department, told media. In essence this is a bail-out of the Kazakh banking sector. The Central Bank had estimated that 11% of the banks’ loan portfolio was considered bad but Mr Kizatov said that the real figure was higher.

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(News report from Issue No. 339, published on Aug. 13 2017)

Kazakh CB blames rouble for tenge fall

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AUG. 2 2017 (The Bulletin) — Kazakhstan’s Central Bank said that speculation over the Russian rouble had forced a depreciation of the tenge. By the end of trading on Aug. 4, the tenge was trading at 332.91/$1, down from around 310/$1 at the end of May. Kazakhs have openly started to worry about a repeat of the devaluation of 2015 that wiped 50% off the value of the currency.

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(News report from Issue No. 336, published on Aug. 5 2017)

Azerbaijan’s CB keeps interest rates steady

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AUG. 1 2017 (The Bulletin) — Azerbaijan’s Central Bank kept its key interest rate at 15% saying that it had seen some improvements in key economic indicators over the past few months. Specifically, it said that growth in the non-oil sector had been 5.4% in the first half of the year, 3.7% increase in trade volumes and 2.2% increase in agriculture. The Central Bank said, though, that inflation remained a concern.

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(News report from Issue No. 336, published on Aug. 5 2017)

Currencies: Uzbekistan’s soum

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JULY 27 2017 (The Bulletin) — So, it looks like we already have the big currency story of the year for the region. At least, that is, unless something goes terribly wrong with some of the more wobbly currencies out there – mentioning no names – Azerbaijan, Turkmenistan and even Kazakhstan.

The IMF returned from a mission to Tashkent saying that the government there was fully intending to relax currency exchange regulations that have strangled foreign investment. The official rate of the Uzbek soum is now just over 4,000/$1. The unofficial rate is more than double. How they merge is going to be the story to watch.

In the meantime, if anybody has missed it, it is clear that the Uzbek Central Bank has been managing a steady devaluation of its currency. The chart below shows the steps it has been making to devalue it – by more than 25% since the end of January.

On the equities front, KAZ Minerals continues to outperform, mainly because of another surge in copper prices.

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(News report from Issue No. 337, published on July 27 2017)

Armenia’s CB keeps interest rates steady

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JUNE 27 2017 (The Bulletin) — Armenia’s Central Bank kept its key interest rate unchanged at 6%, holding true to is assessment earlier this year that it would stop its easing cycle to ward off a potential jump in inflation. Armenia had been measuring deflation until the start of this year when it said that the economy had turned a corner and that prices were now rising. It had steadily slashed its interest rate from 10.5% in 2015 to 6% in February 2017.

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(News report from Issue No. 335, published on July 3 2017)

Kyrgyz CB keeps interest rate steady

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JUNE 28 2017 (The Bulletin) — Kyrgyzstan’s Central Bank kept its key interest rate steady at 5% because of rising inflation and economic growth. The rate decision is good news as it will be seen as a positive assessment of the Kyrgyz economy which has been battling against a downturn over the past three years or so. Inflation in Kyrgyzstan is currently running at around 3.8%. At the end of last year it was recording deflation.

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(News report from Issue No. 335, published on July 3 2017)

Uzbekistan warns that inflation is accelerating

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TASHKENT, JUNE 24 2017 (The Bulletin) — Inflation in Uzbekistan is accelerating fast, the country’s Central Bank said in a rare statement giving economic guidance.

Uzbekistan is Central Asia’s most populous country and the admission will alarm other neighbouring governments who have been hinting at inflationary pressures built into their economies.

As well as warning of inflationary pressures, Uzbekistan’s Central Bank also said that it was pushing up its key interest rate to 14% from 9%, although it was unclear how much impact this rise would have on an economy underpinned by government support and the Black Market.

“This decision is due to an acceleration of inflation over the past period and the need to limit the increased inflationary risks,” the Uzbek Central Bank said in a statement.

“Along with the seasonal fluctuations and supply factors, inflation has been influenced by monetary factors such as the acceleration in lending of the national currency into the economy and its devaluation compared to previous years.”

The unusually frank guidance from the Central Bank may also be linked to both a change in Central Bank chief and a shift in the Uzbek government’s mindset.

Fayzulla Mullajanov, Central Bank chief since independence from the Soviet Union in 1991 and a relic from a Soviet-tinged bygone era, died in May. Parliament has approved Mamarizo Nurmuratov as his replacement.

Mr Nurmuratov is another long- serving Central Bank insider and had been Mr Mullajanov’s adviser but he may have been told to open up the reclusive institution by President Shavkat Mirziyoyev. Mr Mirziyoyev has appeared determined to open up Uzbekistan since taking over from Islam Karimov in September last year.

The Uzbek Central Bank’s statement also referenced the depreciation of its currency. It has steadily managed a drop in value of the Uzbek soum of around 0.7% per week over the past year. In the last 12 months it has dropped by around a third to trade, officially, at 3,930/$1. On the Black Market, the soum is trading at 8,300/$1, according to uzdollar.com.

Uzbekistan’s economic woes are mirrored across the region. A drop in oil prices in 2014, reduced the value of its gas exports and triggered a recession in Russia. Uzbekistan, like its Central Asian neighbours, relies on Russia as an economic driver, creating jobs and markets. Remittances from Russia have picked up but are still at a third of the level of 2014.

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(News report from Issue No. 334, published on June 26 2017)

Georgia’s CB keeps interest rate at 7%

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JUNE 14 2017 (The Bulletin) — Georgia’s Central Bank said that it was keeping its key interest rate at 7% because of stubbornly high inflation. It said that inflation in May was 6.6%, above its 4% annual target, although it also said that it expected the rate of price rises to drop in the second half of the year. Higher taxes and increased prices for imported goods have pushed up prices in Georgia this year. Georgia had slashed rates last year to 6.5% from 8% but started to raise it again in January.

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(News report from Issue No. 333, published on June 19 2017)

Armenia’s CB raises inflation target

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MAY 31 2017 (The Bulletin) — Armenia’s Central Bank raised its inflation target for 2017 to 2.5% from 0.6%, a leading indicator that it feels the worst of an economic downturn has passed. Armenia has been struggling to deal with deflation over the past couple of years. Recent data showed the economy starting to grow. The government targets 3.2% growth.

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(News report from Issue No. 331, published on June 5 2017)