JULY 22 2021 (The Bulletin) — The Armenian dram and the Georgian lari both climbed by 1.5% to their highest levels for several months. Analysts said that a raft of positive economic news and GDP growth estimates from the likes of the IMF have strengthened belief in their economies.

For Armenia, the value of 487.1/$1 is its highest level since September last year, before a war against Azerbaijan. At the start of the year, the dram was valued at 522/$1, which means that it has risen in value by nearly 7%.

As for the Georgian lari, it is now valued at 3.0862/$1, which is its highest level also since September last year before a disputed parliamentary election. In March it was valued at 3.3326/$1, a rise of 7.4%. Despite fast-rising inflation, the IMF said that Georgia’s economy would recover quickly from the pandemic and increase in size by 7.7%.

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— This story was published in issue 493 of the Central Asia & South Caucasus Bulletin, on July 22 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

JUNE 16 2021 (The Bulletin) — Armenia’s Central Bank increased its key interest rate by 50 basis points to 6.5% because it said that economic demand was beginning to rise and potential inflationary tendencies needed to be curbed. This helped push up the Armenian dram to 513.6/$1, a rise of more than 1% and its highest level against the US dollar since mid-December.

The dram fell heavily after Armenia lost a war to Azerbaijan last year over the disputed region of Nagorno-Karabakh. Before the war started at the end of September, the dram had traded at around 484/$1. In April, at its lowest, the dram had fallen to 534/$1. This means that it has recovered by 4% since then despite an acrimonious campaign ahead of a parliamentary election on June 20.

Most other currencies were steady with their values protected by a rise in the key interest rate from the Russian Central Bank. 

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

JUNE 8 2021 (The Bulletin) — The Georgian lari continued to appreciate against the US because, currency traders said, stronger-than-expected economic data had restored confidence in the once-battered currency.

Specifically, traders pointed to year-on-year GDP growth in April nearly 45% higher than the same period in 2020, at the start of the coronavirus pandemic. The lifting of various restrictions and the start of the summer tourist season have also given the lari a boost. By the end of the week, it was trading at 3.1469/$1, a rise of 3.4%, to its highest level since September last year. Overall, the lari has risen by 7.5% since the start of April.

As for other currencies, they were broadly trading level with the Armenian dram nudging up slightly and the Kyrgyz som and Uzbek soum falling slightly.

The Kazakh tenge was trading flat.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

MARCH 15 (The Bulletin) — Currency markets in Central Asia and the South Caucasus were once again subdued. The Armenian dram continued to slip slightly, down 0.2%,  dragged down by its protracted post-war political crisis. It lost a war against Azerbaijan for control of Nagorno-Karabakh in November last year and PM Nikol Pashinyan has been fending off calls to resign ever since.

The Armenian Central Bank has said that it will do all it can to prop up the currency and analysts have said that its sales of US dollar reserves has stemmed a run on the dram.

In neighbouring Georgia, which has also been convulsed by political instability, the Georgian lari was steady at 3.3141/$1. An intervention by the European Union, which is trying to mediate between opposition forces and government, has given the market hope that the political standoff will end. 

Other currencies were flat, with the Uzbek soum trading slightly down.

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— This story was published in issue 475 of the Central Asia & South Caucasus Bulletin, on March 15 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

FEB. 11 2021 (The Bulletin) —  The Kazakh tenge was the biggest winner over the past week, rising by 1.3% to 418/$1, essentially regaining its losses of the previous week. The tenge has been trading in a range of between 415 and 430 to $1 since the middle of last year. 

Across the Caspian Sea to the region’s other heavily traded currency, the Georgian lari, the Central Bank there kept interest rates steady because it said that inflation had slowed. This was in-line with other Central Banks across the region but it still disappointed the markets and the Georgian lari slipped slightly in value. 

Away from the lari and the tenge, the Armenian dropped nearly 1%, despite a small increase in rates by the Central Bank which has signalled that it wants to strengthen its currency. The dram has been under pressure since Armenia lost a war against Azerbaijan last year over the disputed region of Nagorno-Karabakh. In November, it was valued at 490/$1.

— ENDS

— This story was first published in issue 471 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

JAN. 22 2021 (The Bulletin) — Currencies in the region traded broadly flat over the past week, reflecting a slow domestic week while most attention was focused on the swearing-in of Joe Biden as the United States’ 46th  president.

Specifically, the Armenian dram rose by 1.2%, reversing some of the steep loses it has suffered since a war broke out with Azerbaijan over the disputed region of Nagorno-Karabakh. Across the Caspian Sea, The Kazakh som inched up and the Uzbek soum moved down slightly.

Most Central Banks have been selling US dollar reserves to keep their currencies propped. up. In two press releases on Jan. 19 and Jan. 21, the Azerbaijani Central Bank said that it sold $66.4m and $67.4m. Azerbaijan maintains one of the tightest US dollar currency pegs in the region. In 2015, it devalued the manat twice, leaving psychological scars and weakening the reputation of the government. Commentators said that the authorities wanted to avoid a repeat of this.

— ENDS

— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

JAN. 8 2021 (The Bulletin) — The Armenian dram continued to lose value over the Christmas period, trading down another 2.8% at 522/$1. The economic and political fallout from losing a war against Azerbaijan over the disputed region of Nagorno-Karabakh dragged the currency to loses in 2020. It finished the year down 9%.

Azerbaijan, by contrast, has pegged its value to the US dollar and although it has come under pressure, the Azerbaijani Central Bank denied that it had any plans to devalue it. It has remained at a constant level against the US dollar.

In Tbilisi, the Georgian Central Bank said that it was continuing its policy of propping up its lari currency to protect it from being dragged down by a surge in coronavirus cases.

Across the Caspian Sea, the Kazakh tenge rose by 1.2% over Christmas and as stability returned to Kyrgyzstan after a coup in October 2020, its currency rose by 2%.

— ENDS

— This story was first published in issue 467 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

JULY 31 (The Bulletin) — The Kazakh tenge was the main mover over the past week, dropping nearly 2% in value against the US dollar to trade at 421.8/$1, its lowest value since the start of May.

Analysts blamed the sharp drop in the value of the tenge on Kazakhstan’s worsening economic outlook, an outlook dimmed by the spread of the coronavirus. The Kazakh government has continually delayed the relaxation of coronavirus lockdown rules and a recession that analysts had anticipated, with GDP contracting by 5%, now looks like wishful thinking. Kazakhstan also reduced its key interest rate in June, stripping the tenge of some of its support.

Before the coronavirus infected economies, the tenge had been valued at around 380/$1. It fell to an all-time low of 456/$1.

Elsewhere, governments maintained the value of their currencies by selling their US dollar reserves.

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— This story was published in issue 455 of the Central Asia & South Caucasus Bulletin, on July 31 2020.

— Copyright the Central Asia & South Caucasus Bulletin 2020

JUNE 23 (The Bulletin) — The Azerbaijani Central Bank cut its key interest rate to 7% from 7.25% but, as expected, this failed to shift the value of its manat currency. The Azerbaijani manat, like the Turkmen manat, are fixed rigidly against a set US dollar exchange rate. 

The Tajik somoni and the Uzbek soum are also pegged against a US dollar rate, but less rigidly. The Uzbek Central Bank allows its currency to lose ground slowly, and in a controlled manner, against the US dollar. The Tajik Central Bank is less controlled but generally likes to keep its exchange rate level.

As for the other currencies, they are all manipulated by their central banks to a greater or lesser extent and with a greater or lesser degree of openness. The Georgian Central Bank does post updates on its currency sales to prop up the lari.

The biggest mover over the past week was the Kazakh tenge which, other than a brief foray three weeks ago, moved below 400/$1 for the first time since the start of March.

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— This story was first published in issue 451 of the Central Asia & South Caucasus Bulletin on June 23 2020

— Copyright the Central Asia & South Caucasus Bulletin 2020