JULY 27 2016 (The Conway Bulletin) — Georgia’s Central Bank said on Wednesday it cut its key interest rate by a quarter of a percentage point to 6.75%. The decision is in line with the Bank’s policy of containing inflation while reducing the rate to within a 5% – 6% corridor in the short term. Since April, the Bank has cut interest rates three times from the previous level of 8%.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 291, published on Aug. 1 2016)
TBILISI, JULY 21 2016 (The Conway Bulletin) — Koba Gvenetadze, the new chief of the Georgian Central Bank, hinted that he wants the lari currency to slide further to keep pace with Georgia’s neighbours who have all seen their currencies fall heavily over the past two years.
Mr Gvenetadze said that the lari had strengthened too much against the US dollar earlier this year and as soon as the Central Bank relaxed its interventions in the currency market in mid-June, it slid to 2.34/$1, down from a high of 2.13/$1.
“Part of the population thinks that a steady foreign exchange is a synonym of stability, but that’s wrong,” Mr Gvenetadze told the newspaper Rezonansi in an interview designed to lay out his monetary policy. Mr Gvenetadze took over as the Central Bank chief in March.
He said that if people continue to use US dollar-equivalent measures to calculate their wealth or the value of their property, the lari will continue to suffer.
“Sometimes unpopular decisions can be made, but we need to see what happens in the future,” Mr Gvenetadze said.
After losing 27% of its value in 2015, the lari had strengthened significantly against the dollar, gaining 13% by June. Since then, though, it has fallen back to January levels.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 290, published on July 22 2016)
JULY 15 2016 (The Conway Bulletin) — Tajikistan’s Central Bank raised its key interest rate by two percentage points to 11%, its highest since 2009. It had kept the interest rate constant at 8% for over one year until March, when it was raised to 9%. The Central Bank said the move is in line with a policy to combat inflation and restore confidence in the country’s ailing banking sector.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 290, published on July 22 2016)
JULY 11 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank lowered its key interest rate by two percentage points to 13%, official media reported. The Central Bank cited higher oil prices, slowing inflation and the volatility in global markets after Britain’s referendum to leave the EU as the main factors leading to the rate cut. This is the second rate cut in just over two months.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 289, published on July 15 2016)
JULY 8 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank chief Daniyar Akishev said he bet against the sterling ahead of Britain’s referendum to leave the EU, commonly known as Brexit. As he expected market volatility in the aftermath of the vote, Mr Akishev said the Central Bank opened a long position to sell off part of its sterling holdings, effectively gaining from the post-Brexit plunge of the British currency against the US dollar.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 289, published on July 15 2016)
JULY 5 2016 (The Conway Bulletin) — Uzbekistan’s Central Bank ordered banks to impose a $300 monthly limit on card withdrawals abroad, possibly an effort to limit exchange rate speculation. The previous limit was set at $100/day. Uzbeks typically withdraw cash in US dollars and local currencies when travelling abroad to hoard and hedge against the sum currency, which has steadily weakened against the US dollar in recent months.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 288, published on July 8 2016)
JUNE 15 2016 (The Conway Bulletin) – Georgia’s Central Bank cut its key interest rate by half a percentage point to 7% to combat slowing inflation. In April, the Central Bank cut its key rate for the first time in three years to 7.5% from 8%. The Central Bank has said that it wants to push its interest rate down to around 5% – 6%, described as the country’ neutral rate, after raising it last year to defend its lari currency.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 285, published on June 17 2016)
ALMATY, JUNE 10 2016 (The Conway Bulletin) — Currencies across the Central Asia and South Caucasus region have stabilised this year after losing 30% to 50% of their value in 2015 thanks, in part, to record high interest rates but governments are now having to deal with deflation.
As well as raising interest rates to their highest level since the Global Economic Crisis of 2008/9, Central Banks bought heavily to defend their currencies. The Kazakh Central Bank said it bought $3.7b in Jan.-May 2016 and in Georgia, the Central Bank intervened twelve times in just two months, although on a smaller scale.
And both Central Banks have now started unwinding high interest rates, hoping to spark economic activity.
Earlier this year the Kazakh Central Bank cut its key interest rate to 15% from 17%. Georgia’s Central Bank cut its interest rate to 7.5% from 8% and promised further cuts. New data from Georgia’s statistics agency highlighted the challenge. It said that prices in May dropped by 0.4%, the third consecutive month of falling prices. Year-on-year inflation in May measured 2.1%, down from a high of 6.3% in November.
And this scenario is playing out across the region.
Last month Armenia’s Central Bank said that year-on-year inflation measured minus 1.9% and immediately cut interest rates by 0.5% to 7.75%.
But Alex Nice, an analyst at the Economist Intelligence Unit, said that the region’s weak banking systems and high levels of dollarisation means that there is little Central Banks can do to impact economic activity.
“The exchange rate is a more powerful lever for managing prices in the economy [than the official interest rate],” he said.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 284, published on June 10 2016)
MAY 30 2016 (The Conway Bulletin) — Kyrgyzstan’s Central Bank cut interest rates late by two percentage points to 6% because it said that inflation had significantly slowed, local media reported. Annualised inflation measured 0.2% at the end of April, an indication that economic activity has slowed in Kyrgyzstan. The Central Bank has also kept the som-US dollar exchange rate below 70/1 for two months.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 283, published on June 3 2016)
MAY 17 2016 (The Conway Bulletin) – Armenia’s Central Bank cut its key interest rate by half a percentage point to 7.75%, its lowest rate since November 2014, as it tried to counter sharply falling prices. Annualised inflation at the end of April measured minus 1.9%, the Central Bank said last week. It has steadily lowered interest rates from a high of 10.5% in July 2015.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 281, published on May 20 2016)