MAY 21 2015 (The Conway Bulletin) – Halyk Bank, Kazakhstan’s second largest bank majority owned by the daughter of Kazakh president Nursultan Nazarbayev and her husband Timur Kulibayev, posted year-on-year profits down 29%. Costs had risen, in particular workers’ salaries. Kazakhstan devalued its currency in 2014, triggering wage inflation.
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(News report from Issue No. 233, published on May 28 2015)
MAY 22 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank denied it was restricting access to US dollars as a form of controlling its currency.
Two days earlier, the Tashkent-based Uzmetronom.com website quoted unnamed but, supposedly, reliable sources as saying that the Central Bank had halted the process for foreign and local companies to convert their local currency into US dollars for an unspecified period of time.
This is critical for companies which are keen to get their cash out of the country. Not being allowed to convert it severely undermines their operations.
Now, though media have quoted the Uzbek Central Bank as saying that this is not true.
Like the other countries in Central Asia, Uzbekistan trying to cope with a drop in oil prices and a fall Russia’s economy which has rippled across the region.
Last week, media reported that a senior official in the Uzbek Central Bank had written a letter to his superiors to warn that the country was running out of cash and that it could hardly afford to pay for vital services and salaries.
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(News report from Issue No. 233, published on May 28 2015)
MAY 19 2015 (The Conway Bulletin) – The IMF weighed into the debate surrounding the tenge when it said the Kazakh Central Bank had enough cash to defend the currency against a sudden devaluation. The Central Bank has been under increased pressure to follow neighbours and devalue its currency.
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(News report from Issue No. 232, published on May 20 2015)
MAY 15 2015 (The Conway Bulletin) – Azerbaijan’s Constitutional Court ruled that loans taken out in US dollars before the 30% devaluation of the Azerbaijani manat in February have to be repaid in full. Borrowers had hoped the Court would agree for debt to be repaid in manat at the lower rate.
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(News report from Issue No. 232, published on May 20 2015)
MAY 18 2015 (The Conway Bulletin) – Uzbeks’ lack of confidence in the som has weakened Uzbekistan’s banks, reduced their capital and hit their ability to pay salaries and pensions.
This was the withering assessment of Ulugbek Mustafayev, a deputy chairman of Uzbekistan’s Central Bank, according to a report by the US-funded Radio Free Europe/Radio Liberty (RFE/RL).
RFE/RL said it had seen a copy of a letter, dated April 10 and stamped “official use only” written by Mr Mustafayev to Uzbek PM Shavkat Mirziyoyev.
The letter gives a vital, and rare, insight into official Uzbek thinking on monetary policy. It’s virtually unheard of for a senior official to speak out against his or her bosses.
In the letter, Mr Mustafayev said a lack of confidence by the population in the som currency had pushed people into relying on the black market and US dollar payments over bank accounts. He said that this had created a shortfall in capital of more than 2 trillion som ($620m) and that state pensions and salaries to interior ministry officials, the defence ministry and other government workers were not being paid.
The regional financial crisis and the fall in the som/dollar exchange rate has reduced the population’s trust in the national currency and in financial institutions.
Most transactions in Uzbekistan are reportedly carried out in cash. Mr Mustafayev said that consumers had paid in far less than expected into Uzbek banks in the first quarter of the year.
The Uzbek system, already frail, is becoming weaker, Mr Mustafayev said in his letter.
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(News report from Issue No. 232, published on May 20 2015)
MAY 1 2015 (The Conway Bulletin) – Tajik president Emomali Rakhmon sacked the head of Tajikistan’s Central Bank Abdujabbor Shirinov, media reported, an apparent reaction to the continued slide of the somoni currency.
This year the somoni has nose-dived by around 20% against the US dollar as it struggled to cope with a fall in the value of the Russian rouble and a dip in Russia’s economy which has hit remittances.
Mr Shirinov, a previous Tajik ambassador to the United States and head of the Central Bank since 2012 has taken increasingly desperate measures to defend the currency. Last month he ordered exchange kiosks to be banned but instead of giving the government more control over its currency, it just forced money changers into the black market.
The Dushanbe-based ASIA-Plus reported that Jamshed Nourmahmadzoda had been appointed Tajikistan’s new Central Bank chief. Mr Nourmahmadzoda was previously head of Amonatbonk.
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(News report from Issue No. 230, published on May 6 2015)
MAY 4 2015 (The Conway Bulletin) – Salaries have risen by nearly 10% since the beginning of the year in Turkmenistan, official media reported quoting the Turkmen finance ministry.
This piece of data is important for two main reasons. Firstly, it is a rare piece of data from Turkmenistan’s government on prices and inflation. Secondly, it shows the probable impact of the devaluation by 30% of Turkmenistan’s manta currency on Jan. 1.
Turkmenistan, like other countries in the region, has been struggling to cope with the fall in global energy prices and the downturn in Russia’s economy that has slashed around 50% off the value of its rouble currency.
Both issues have pressured Central Asian economies and Turkmen President Kurbanguly Berdymukhamedobv ordered the Central Bank to cut the value of the manat for the first time in seven years.
Typically, currency devaluations in Central Asia have triggered inflation and, although not officially confirmed, this appears to be the case in Turkmenistan.
The Turkmen finance ministry said salaries had risen by 9.5% in the first three months of the year. It didn’t give any more information.
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(News report from Issue No. 230, published on May 6 2015)
APRIL 30 2015 (The Conway Bulletin) – Bidzina Ivanishvili, founder of the ruling Georgian Dream coalition, and a former Georgian PM, has once again criticised the Central Bank for failing to stop a depreciation of the lari currency, media reported. The previous government, loathed by Mr Ivanishvili, appointed the current Central Bank chief.
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(News report from Issue No. 230, published on May 6 2015)
APRIL 29 2015 (The Conway Bulletin) – Kazakh media reported a 19% drop in sales of US dollars, euros and roubles at foreign exchange points in March compared to February, suggesting a slowdown of the near panicked drive by ordinary Kazakhs to sell out of tenge when they thought a devaluation was imminent.
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(News report from Issue No. 229, published on April 29 2015
APRIL 28 2015 (The Conway Bulletin) – Georgia’s lari currency dropped to a 16-year low against the US dollar despite efforts by the Central Bank to prevent the fall.
The Central Bank said it had sold off another $40m of its reserves to prop up the lari. This was the fifth intervention of $40m this year by the Central Bank despite an earlier pledge by its head, Georgy Kadagidze, not to sell its reserves to defend its value.
Even so, the lari fell to 2.3 against the US dollar its lowest level since 1999. Since November, the lari has lost around a third of its value.
A fall in the price of oil and a drop in the value of the Russian rouble have hit the economies of Central Asia and the South Caucasus hard.
Georgia has reported a 27% drop in exports in the first quarter of 2015 compared to a year earlier and has cut its projected GDP growth to 2% from an earlier estimate of 5%. Remittances from Russia have fallen by around 20%.
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(News report from Issue No. 229, published on April 29 2015)