FEB. 13 2015 (The Conway Bulletin) — Georgia’s foreign trade dropped by 9% in January compared to a year earlier, the national statistics office said. It blamed the Ukrainian civil war and the fall in the rouble for reducing demand for Georgia’s key exports — wine, water and citrus fruits.
ENDS
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(News report from Issue No. 219, published on Feb. 18 2015)
FEB. 17 2015 (The Conway Bulletin) — Kyrgyzstan has spent around 10% of its currency reserves this year defending its currency from devaluing, media quoted the chairman of the Central Bank, Tolkunbek Abdygulov, as saying. The Kyrgyz som is closely linked to the Russian rouble and has devalued against the US dollar by around 20%.
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(News report from Issue No. 219, published on Feb. 18 2015)
>>Rouble devaluation makes Russian goods cheap>>
FEB. 6 2015 (The Conway Bulletin) — Local authorities in Kazakhstan said they are worried about cheap goods from Russia flooding its northern markets. The rouble has halved in value, making goods from Russia cheap for Kazakhstanis.
Duisenbai Turganov, vice-governor of the Pavlodar province, directed his concerns to Kazakh deputy PM, Bakhytzhan Sagintayev.
He said Russian goods flooding the Kazakh market could be classified as a dumping practice.
“Prices of Russian competitors are 30-60% lower than Kazakh suppliers can offer. This has a negative impact on the activities of the local industrial enterprises,” the tengrinews.kz website quoted him as saying.
The row piles more pressure on to the Eurasian Economic Union which has become tainted by commercial wars among the members. Belarus and Armenia are also members.
And we’ve seen this issue before. Since December, Kazakhs are crossing the border to buy cheap goods in Russia. Although quantities may be risible for Moscow, on the other side of the fence, buying Russian goods makes a difference for Kazakhs.
From cars, to poultry, to petroleum products, the large-scale entry of cheap goods from the north into Kazakhstan creates an imbalance in the Kazakh economy and puts local factories under stress.
The governor in Pavlodar may be talking peanuts to Russia, but these are vital components of the socio-economic makeup of the northern regions of Kazakhstan.
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(News report from Issue No. 218, published on Feb. 11 2015)
FEB. 6 2015 (The Conway Bulletin) — Kazakhstan’s net gold and foreign currency reserves increased to $28.2b in January from $28b in December and $24b from a year earlier, highlighting its ability to fight downward pressure on its tenge currency. Kazakhs worry about another devaluation.
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(News report from Issue No. 218, published on Feb. 11 2015)
FEB. 9 2015 (The Conway Bulletin) — A handful of residents in Almaty staged another protest against the falling value of the Kazakh tenge. According to a Radio Free Europe report the protesters said they had taken out mortgages when $1 equalled 107 tenge. Now $1 equalled 186 tenge. Protests are rare in Kazakhstan but pressure on the tenge has angered people.
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(News report from Issue No. 218, published on Feb. 11 2015)
JAN. 30 2015 (The Conway Bulletin) — Perhaps even the phlegmatic Turkmen president Kurbanguly Berdymukhamedov is beginning to become unnerved by the sudden drop in energy prices. Media reported that he held an unprecedented TV broadcast in which he explained to ordinary Turkmens how he had been forced to devalue the manat currency (Jan. 30).
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(News report from Issue No. 217, published on Feb. 4 2015)
>>Armenia’s economy is closely linked to Russia’s fortunes>>
JAN. 30 2015 (The Conway Bulletin) — Ratings agencies Fitch and Moody’s downgraded Armenia’s bond ratings to negative from stable, another sign that the Armenian economy is in for a turbulent few months.
Fitch said that it expected Armenia’s economy to slip into a recession this year and the deficit to widen.
“Remittances amount to about 15% of GDP and fell by about 30% during the last months of 2014 as 90% of the total come from Russia,” it said in a research note.
Armenia has been hit by the drop in the Russian rouble and the turmoil in Russia’s economy, triggered by a fall in oil prices and sanctions imposed by the West after the Kremlin’s intervention in Ukraine.
Over the past seven months, Armenia’s dram currency has fallen by nearly 20% against the US dollar despite a steady increase in interest rates.
Of course, it’s not just Armenia which is exposed to the drop in Russia’s economy and currency. The rest of Central Asia and the South Caucasus have also been badly hit.
Armenia, though, is particularly closely linked. It is desperately hoping that there will be some improvement in Russia’s economy.
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(News report from Issue No. 217, published on Feb. 4 2015)
>>Worries about devaluation drive Kazakhs to the rouble>>
FEB. 4 2015 (The Conway Bulletin) — People in Kazakhstan have been buying roubles at surprising rates over the past couple of months.
Exchange bureaus data shows that the demand for the Russian currency increased steadily in November and skyrocketed in December despite the rouble losing value against the Kazakh tenge (Jan. 28).
No official reason has been given for the rise in rouble demand but there are several plausible reasons. A Bulletin correspondent in Almaty said many Kazakhs see the ailing rouble as a cheap currency for cross-border shopping.
Of course, Kazakhs may also be speculating that the rouble is valued too cheaply at the moment and that it will rise in value. This is almost certainly true of its value against the Kazakh tenge.
The Kazakh Central Bank has vowed to avoid another devaluation of the tenge — it cut the value of its currency by 20% last year — but the market, and most people on the streets think that another sudden devaluation is inevitable.
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(News report from Issue No. 217, published on Feb. 4 2015)
JAN. 30 2015 (The Conway Bulletin) — Georgia’s Central Bank chief, Georgy Kadagidze, said he would tighten monetary policy next week after another drop in the value of its lari currency. Mr Kadagidze has said that he would not spend the bank’s reserves heavily to prop up the lari which has lost around 15% of its value since November.
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(News report from Issue No. 217, published on Feb. 4 2015)
>>Pressure building on the C.Bank as lari hits 10-year lows>>
JAN. 27 2015 (The Conway Bulletin) — Georgia’s economic policymakers have said that they will not intervene to halt the fall in the value of the lari currency.
Pressure has been building on the Central Bank as the lari has lost 7% of its value against the US dollar this year, adding to a 12% loss at the end of 2014.
But economy minister, Giorgi Kadagidze, said that the Central Bank would not start spending its reserves to prop up the currency.
The lari is now trading at over 2 to the US dollar. This is the cheapest that the lari has been for over a decade.
The big worry for Georgian economic decision makers is that inflation will start creeping up.
At its last meeting on interest rates in December, the Central Bank elected to keep the key rate unchanged. The Central Bank chief, Giorgi Kadagidze, said that if there was any hint of inflationary pressure appearing he would raise interest rates.
Georgia had been less affected by the turmoil in Russia’s economy and the drop in oil prices over the past six months. Clearly the poor economic data is beginning to catch up with it.
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(News report from Issue No. 216, published on Jan. 28 2015)