Tag Archives: currency

Azerbaijani banks say C.Bank imposes currency controls

BAKU/JULY 17 2021 (The Bulletin) — Commercial banks in Azerbaijan are limiting foreign currency sales to try to prevent a fall in the value of the manat currency, the Bloomberg news agency reported.

It quoted several residents of Baku who said that they had tried to change manat into US dollars at commercial banks but had been told that the Central Bank had banned it. Azerbaijani media has been reporting on currency exchange limits for much of the year.

In an emailed response to Bloomberg’s questions on the blocking of foreign currency sales, the Central Bank was quoted as denying that this was a formal policy and that it instead promoted a “liberal” currency exchange.

But the Central Bank has maintained a tight peg on the value of the manat for the past five years, ever since it was bounced into two consecutive devaluations in 2015, linked to the oil price collapse of 2014, which damaged its reputation for competence.

Both the Georgian lari and the Armenian lari lost around 15% of their value at the start of the global coronavirus pandemic, and its associated lockdowns, last year. By contrast the Azerbaijani Central Bank maintained the value of the manat at 1.6995/$1. Analysts have said, though, that the pressure to devalue has been growing.

In January 2016, shortly after devaluing the manat for the second time, the Central Bank also brought in rules which temporarily stopped currency traders from buying or selling currencies.

>>See P.8 for currency market news

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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

Kazakhstan raises interest rates to protect currency against the coronavirus

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MARCH 26 (The Bulletin) — Faced with a collapse in the value of its tenge currency, the Kazakh Central Bank raised interest rates by 2.75 percentage points to 12% on March 9. It confirmed on March 16 that it was going to maintain this rate.

On March 24, Kazakhstan also banned the export of all foodstuffs. Officials said that food was needed in Kazakhstan for now and that it could not afford to be exported. The government has also cut its economic outlook for 2020 partly, it needs to be stressed, because of the collapse of oil prices.

On March 17, the government also announced a series of tax cuts and cheap credit initiatives which it said would help business recover from the shock of the coronavirus. Retailers, restaurants, cinemas and other business forced to close because of lockdowns linked to curtailing the spread of the coronavirus will be exempt from property tax for a year. Banks have been told to defer loan repayments and the government will spend $750 million on infrastructure projects which will create 120,000 jobs.

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— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Georgia sells US dollar reserves to prop up lari currency

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MARCH 26 (The Bulletin) — In Georgia, the Central Bank sold $140m of its currency reserves to prop up its ailing currency and also released a statement which said that its economy would recover once it has come through the fallout of the coronavirus.

All shops have been closed, other than pharmacies and food shops. As reported on page 5, Georgia’s important tourist industry is facing collapse. Estimates said that 9m people visited Georgia in 2019, double the number from 2012.

The government has not yet downgraded its GDP growth estimates for 2020 but analysts said they expected this to happen within the next few days.

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— This story was first published in issue 440 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020

Markets: LAri pushes up to highest level since August

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DEC. 9 (The Bulletin) –The Georgian lari pushed up 2% to its highest level since mid-August, propped up by the Central Bank which sold $20m at the end of November. The Georgian Central Bank has been under pressure to intervene to stop the slide of the lari, which has fallen by around 9% this year. It now trades at 2.9225/$1. It started the year at 2.6651/$1.

The region’s other currencies were steady, including the Kazakh tenge. Its Central Bank left interest rates at 9.25%, saying that it needed to keep them relatively high in order to fight off inflation which it warned could be a problem. It is currently around 5.5% but could hit 6% in 2020, the Central Bank said.

Kazakhstan’s Central Bank also said that a widening current account deficit was also restricting its room for manoeuvre. It said that the deficit would widen to 3.1% of GDP next year from 2.2% this year.

The tenge was unmoved at 386.1/$1 but is still down from 381/$1 at the start of the year.
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— This story was first published in issue 431 of the weekly Bulletin on Dec. 9 2019

Markets: Currencies steady after downward pressure

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NOV. 27 (The Bulletin) — After a couple of months of sustained downward pressure that pushed currencies to some of their lowest levels, markets have slowed and steadied. Most currencies failed to shift significantly over the past week, with the exception of the Kazakh tenge which strengthened by 0.7%. It has pulled back from near an all-time low of 389/$1 and is now valued at 386.4/$1.

On the Central Bank news front, the Trend news agency has been reporting that the Uzbek Central Bank is considering lowering interest rates next year to give borrowing and spending a lift. It is held back by rising inflation, though, with analysts estimating that the real inflation rate if around 14 – 16%.

In Bishkek, the Central Bank said that it was going to keep its key interest rate steady because inflation had finally started to pick up. It said that inflation measured 2.5% in mid-November and would rise to 3.5% by the end of the year. It has an inflation target of 5-7%.

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— This story was first published in issue 430 of the weekly Bulletin.

Uzbekistan says it may start cutting interest rates

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NOV. 26 (The Bulletin) — Uzbek Central Bank chief Mamarizo Nurmuratov said that he may start cutting interest rates from next year as it focuses its attention on trying to beat inflation. Uzbekistan last changed its key interest rate in 2018 when it moved it to 16% from 14%. This month the Central Bank has been handed more power and told to focus on dampening inflation which it expects to hit 13% next year.
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— This story was first published in issue 430 of the weekly Bulletin.

CURRENCIES: Lari drops to lowest rate for five years

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The biggest mover this week was the Georgian lari which fell by half a percentage point to 2.9591/$1, its lowest rate against the US dollar for at least five years.

Analysts said that the drop in lari value was linked to concern about rising inflation that has undermined strong economic growth this year.

Economists also expect the region’s other big currency, the Kazakh tenge, to fall. In a Reuters poll of seven analysts, four said that the tenge would fall further this year. All seven said that it would be trading at a lower value in 12 months time than it does currently.

They said that a government budget gap between spending and income was a concern. Reuters reported that the government deficit was 813b tenge ($2.1b) on Oct. 1, triple the deficit of one year earlier. This has weighed on the performance of the tenge this year which has fallen from 380.96/$1 to nearly 389/$1.

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— This story was first published in issue 428 of the weekly Bulletin.

Kazakhstan to bail out Tsesnabank

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ALMATY/Jan. 29 (The Conway Bulletin) — — The Kazakh government will bail out Tsesnabank, the country’s second-largest bank, for the second time in six months, once again highlighting the fragility of Kazakhstan’s financial system.

The $1.6b bailout prompted an outburst from President Nursultan Nazarbayev that finance officials and the Central Bank were “cowards” and were not doing enough to protect the system from conflicts of interests and poor bank owners.

“You are just cowards, not cabinet ministers!” Reuters quoted Mr Nazarbayev telling cabinet ministers and Central Bank officials at a meeting. “Are your hands and knees shaking too much to make a decision? What are you doing here then?”

Mr Nazarbayev is particularly sensitive about the strength of Kazakhstan’s banks. He ordered the Central Bank to tighten up its regulations of the banks after the 2008/9 Global Financial Crisis, when the Kazakh government had to buy a handful of bankrupt banks, but an economic downturn in 2014/17 showed up the sector’s continued weakness.

Some banks did prove resilient in the downturn, but the government was still forced to bail out some the more heavily-indebted larger banks and also allow a handful of smaller banks to go bankrupt.

This has hit the government’s resources, dented its wider image for financial competence and worried ordinary people who have drawn down their bank deposits.
Tsesnabank, which is owned by Adilbek Zhaksybekov, received a $1.2b bailout in September. Mr Zhaksybekov is a close confidant of Mr Nazarbayev and his former Chief-of-Staff.

END

>This story was first published in issue 398 of The Conway Bulletin on Jan. 31 2019
Copyright The Conway Bulletin 2019

CURRENCY MARKETS: Kyrgyz som hits highest level since June 2017

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FEB. 6 (The Conway Bulletin) – Support from the Central Bank pushed the Kyrgyz som up to 68.4/$1 from 69.31/$1, its biggest single-day leap since April 2017. It has come off slightly since then but the som is still trading at around an eight month high.

Analysts said that there were no fundamental reason why the som should jump in value and instead said that the move was likely down to quiet support from the Central Bank. The Kyrgyz Central Bank has a reputation for intervening to support the som if it looks to be dropping too low.

In November and December, the som had been flirting at lows not seen since the start of 2016 when oil was below $30/barrel and Russia’s economy, the driver for Central Asia, had been in recession.

Aside from the Kyrgyz som, most of the currencies shifted down a couple of ticks, while the Georgian lari, breaking its bull-run, stayed level.

With oil and the rest of the global commodities coming off highs, it is likely that there will be some reverses over the next few weeks.

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>>This story was first published in issue 360 of The Conway Bulletin

Azerbaijani Central Bank says inflation to be 6-8% in 2018

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DEC. 29 (The Conway Bulletin) — Inflation in Azerbaijan should measure between 6% and 8% in 2018, the Central Bank said. In the past couple of years, inflation in Azerbaijan has been measured in the double digits as the economy fights a sharp economic downturn and a currency devaluation that wiped 50% off the value of the manat in 2015/16.

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— This story was first published on Jan. 5 2018 in issue 356 of The Conway Bulletin