Tag Archives: currency

Kazakhstan’s Halyk Bank files Q3 results

NOV. 17 2015 (The Conway Bulletin) — Halyk Bank, one of Kazakhstan’s largest retail banks, reported increased net income in the third quarter of 2015 of 36b tenge, roughly a third larger than the third quarter of 2014. In US dollar terms, taking into account the devaluation of the tenge, Q3 2015 and Q3 2014 are roughly the same. Operating expenses grew by 12.7% in the first 9 months of 2015 compared to the same period in 2014 because of wage inflation linked to the devaluation of the tenge.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kyrgyz Central Bank buys som

NOV. 13 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank bought another $14m worth of som to steady its value at around 73/$1, highlighting the currency’s fragility. The Kyrgyz som, like other currencies in the region has lost about a third of its value this year.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Uzbekistan earmarks $100m to prop up banks

NOV. 20 2015 (The Conway Bulletin) – Uzbekistan’s government will allocate 275b sums over the next 13 months or so to act as a safety-net for its four biggest banks to survive the region’s worsening economic depression.

The announcement of a credit line to state-owned Agrobank, the National Bank for Foreign Economic Activity, Microcredit Bank and Qishloq Qurilish Bank – is a another indicator that Uzbek policy makers have begun to recognise and react to the region’s worsening economic outlook. Last week, the Central Bank indicated that it was trying to gradually reduce the official value of its sum currency, in line with devaluations across Central Asia.

The banks’ safety-net, worth around $101m at the official exchange rate but unofficially worth around $45m at the Black Market rate, has been earmarked to support the banks’ liquidity, media reported. This effectively means it is a government slush fund created to bail out the banks.

The cash has been parcelled up, with 100b sums allocated to Agrobank, 75b sums to the National Bank for Foreign Economic Activity and 50b sums each for Microcredit Bank and Qishloq Qurilish Bank.

Earlier this month, the Fitch ratings agency said that Uzbek banks were generally stable.

“As internal capital generation at the state banks is moderate and lags growth, state banks are getting regular capital contributions from the government in order to comply with regulatory capital requirements,” Fitch said in its report on Nov. 11.

“Liquidity is comfortable due to solid buffers as well as potential state support.”

It also said that non-performing loans, considered those over 90 days late, were relatively low with 3% at Agrobank and 14% at Microcredit Bank.

Like the rest of the region, though, Uzbekistan has been struggling to cope with the sharp downturn in Central Asia’s economic health. This month the Uzbek government even started talking about selling off stakes in state-owned companies to increase capital and boost their knowledge- base.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Turkmen currency falls

NOV. 15 2015 (The Conway Bulletin) – A Turkmen opposition website reported that the Turkmen authorities have placed restrictions on foreign currency withdrawals. The website, chronotm.org, is well-regard. It said the Black Market rate for the Turkmen manat has dropped to between 4.20 and 4.50/$1 compared to $3.60/$1 a few days ago.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Currencies: Kazakhstan’s tenge, Kyrgyzstan’s som

NOV. 20 2015 (The Conway Bulletin) — The Kazakh tenge was steady this week, trading at around 307.2/$1, off an all-time low against the US dollar of 311/$1 earlier in November.

There is still much speculation by analysts on just how monetary policy in Central Asia’s biggest economy is going to change under new Central Bank chief Daniyar Akishev. He said that inflation was too high and appeared to make this his priority.

With this in mind, expect another interest rate rise at the Central Bank’s policy meeting next month — if the policy wonks don’t cancel it again. There are, though, two urgent problems, it seems to me, with the Kazakh monetary policy. People don’t know what it is or whether it works.

The new key interest rate — overnight repo rates — was only introduced in September. It was raised in October to 16% from 12% and then ignored in November when the Central Bank cancelled its policy meeting at the last moment. Does this interest rate have any credibility? Does the market even care about it? It doesn’t appear to have had any effect so far.

And Mr Akishev appeared to acknowledge as much when he said that a fall in oil price would send the tenge tumbling further. Oil prices, outside the Kazakh Central Bank’s control, are the driver of tenge value and not its key interest rate.

In neighbouring Kyrgyzstan, the som currency did continue to set new records against the US dollar. It hit an all-time low on Friday of 72.5/$1 versus 71.9/$1 at the start of the week. On Oct 1, the som had been valued at 68.8/$1, meaning that it has lost over 5% of its value in the past seven weeks.

As the Bulletin reports in the main section of the newspaper, information coming out of Turkmenistan is that its manat currency has devalued and that the government has placed restrictions on the amount of cash people can withdraw from the banks. Earlier this month, The Bulletin also reported on the devaluation of the Uzbek soum.

Even staunchly controlled currencies are feeling the pressure, it seems.

And over in the South Caucasus, it is a similar story. Since its sharp 33% devaluation in February, the Azeri manat has been kept steady but analysts have increased chat of a need to devalue again.

Both the Armenian dram and the Georgian lari were steady through the week.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Tax on petrol to double in Kazakhstan

NOV. 17 2015 (The Conway Bulletin) – Seemingly trying to defy logic, the Kazakh government said it wanted to double tax on petrol but that the price rise would not add to inflationary pressure in the economy.

The day after economy minister Yerbolat Dossayev said that he wanted to increase tax on petrol, the new head of the Kazakh Central Bank Daniyer Akishev also said inflation this year in Kazakhstan was likely to be above even the upper 8% estimate.

The tenge has almost halved in value since the Central Bank ditched its US dollar peg in August, forcing prices up across economy.

Shortly after the tenge lost its US dollar peg, the government also ditched it price control over petrol, allowing prices to increase to match the tenge devaluation.

And now Mr Dossayev has said that he wants tax on a tonne of petrol to rise to 10,500 tenge ($16.70) from 5,000 tenge ($34.10) which would equal, roughly, to an increase of around 5% for consumers.

Petrol prices have already risen around 25% this year and any further increase will be unpopular.

As for inflation in general, Mr Akishev, made Central Bank chief at the start of the month, said targeting inflation was now his highest priority.

“Our task now is to ensure stable inflation and get back to the range of 6-8% in 2016,” he said.

The problem for Kazakhstan is that with oil prices continuing to be suppressed, pressure builds on the tenge to fall further which means that inflationary pressure also builds.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Tenge could fall says Kazakh CBank

NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s new Central Bank chief Daniyar Akishev said the tenge could fall further if oil drops below $40/barrel. The tenge has lost half its value this year. The price of Brent oil is around $44/barrel.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Inflation rises in Armenia

NOV. 20 2015 (The Conway Bulletin) – Prices in Armenia grew by 4.4% in the first 10 months of the year, media quoted the National Statistics Service as saying, pointing to high overall inflation for 2015.

Inflation has forced its way back onto the top of Central Bankers’ agenda this year. A collapse in local currencies’ values against the US dollar has triggered a sharp rise in prices for energy imports and domes- tic electricity production.

Inflation in Armenia is probably lagging inflation in neighbouring Georgia because the government has chosen to suck up the cost of the electricity price rises rather than pass

it on to consumers after a series of major demonstrations in the summer. In Georgia, the government has more successfully passed the cost of the electricity production on to consumers.

But, importantly, with another two months of the year to be factored into the final calculation, inflation in Armenia is already running above the initial estimates in the 2015 budget.

Trade turnover is also down, 20% lower in the first 10 months of the year compared to the same period in 2014. This is generally in-line with other economies across the Central Asia and South Caucasus region.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Currencies: Kyrgyzstan’s som, Kazakhstan’s tenge

NOV. 13 2015 (The Conway Bulletin) — The Kyrgyz Central Bank intervened in the currency market, selling around $14m on Friday to halt the fall of the som. It still fell 3% over the week finishing at 72.1/$1.

In Kazakhstan, the tenge was stable at 307/$1, although it reached a record low of 312/$1 on Monday.

The Georgian lari was stable at 240/$1 throughout the week.

In Armenia and Uzbekistan, currencies fell faster than previously. The Armenian dram lost 1% to 480.9/$1 and the Uzbek sum fell by 0.5% to just above 2,700/$1 on the official market. On the Black Market, the US dollar is reportedly selling at 6,200sum.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)

Foreign currency bank deposits increase in Kyrgyzstan

NOV. 10 2015 (The Conway Bulletin) – The amount of cash in Kyrgyzstan’s banking system held in foreign currencies jumped by 6.7% to nearly 65% between January and August, the Central Bank said according to Kyrgyz media reports.

This is a steep rise and highlights a lack of confidence in Kyrgyzstan’s som. It has lost around 26% of its value against the US dollar this year despite repeated interventions by the Central Bank to prop it up.

Inflation has also increased, although this has slowed over the past couple of months, pressuring people’s savings.

Interest rates are at a 10%, lower than they were at the start of the year but higher than at any time since 2012.

Like its neighbours, Kyrgyzstan has been struggling to deal with the fallout from a deepening economic malaise which has hit the region. One of its biggest problems has been a sharp drop in remittances sent back to Kyrgyzstan from workers in Russia.

ENDS

(News report from Issue No. 256, published on Nov. 13 2015)