JAN. 23 2015 (The Conway Bulletin) — Nurlan Smagulov, head of the Astana Motors car dealer and an influential businessman, stepped into the debate over the Kazakh tenge. At a press conference, he said policymakers should not devalue the currency for the second time as this would undermine its credibility and knock consumer spending.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 216, published on Jan. 28 2015)
>>Nazarbayev summons his chief economic lieutenant for talks>>
JAN. 16 2015 (The Conway Bulletin) — Kazakh president Nursultan
Nazarbayev summoned the head of Samruk Kazyna, the country’s
sovereign wealth fund, for crisis talks over the falling price of
oil and the drop in the value of the Russian rouble.
The meeting highlights just how worried Mr Nazarbayev and his
senior ministers are about the recent economic downturn. Most major
financial institutions now expect the Kazakh economy to grow by
only 1.5% this year, a relatively small amount.
When Mr Nazarbayev announced last year a new economic policy, he
aimed to enter the New Year with a Keynesian industrial programme
that would have injected billions into construction projects and
subsidies.
Currency depreciations and oil markets, however, have shattered the
plan.
After his meeting with Mr Nazarbayev, Umirzak Shukeyev, the Samruk
Kazyna chief, said: “The goal is to reduce administrative costs by
20% and investment engagements by 18%.”
This, then, is the opposite of what had been promised.
The most feared buzzwords on the streets from Almaty to Atyrau are
devaluation and austerity. Several consulting and investment firms
have forecast a devaluation in the first quarter. The research
branch of Kazakhstan’s second largest lender, Halyk Bank, told
Bloomberg that they deem a depreciation of the tenge as inevitable.
The leader of the National Business Association, Rakhim Oshakbayev
publicly asked the government to protect private companies from the
risk of devaluation (Jan. 20).
In Kazakhstan, the government is expected to act to reverse the
economic downturn but with no significant increase in hydrocarbon
and commodity output, its only option is to dig into the reserves
of the sovereign fund and hope for the best, or so it often seems.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 215, published on Jan. 21 2015)
>>Remittances from Russia fall>>
JAN. 21 2015 (The Conway Bulletin) — As the Russian rouble falls in value, families of Azerbaijani migrants working in Russia face an increasingly frustrating economic headache.
The Azerbaijani manat has doubled in value against the Russian rouble in the last five months ago. This means that the Russian roubles sent back by Azerbaijani workers to their families are now worth half.
Unofficially around 2m migrants from Azerbaijan work in Russia. They send home about $2-3b a year, Azerbaijani economists have estimated.
Gulsara Qurbanova, a mother of three said she and her children live on money her husband sends from Russia. “Before he used to send us around 35,000 roubles a month and we received around 800 manat when we converted it,” she said. Her voice was strained with worry.
“Now it’s about half that. Obviously we face financial hardship because of it.”
The drop in the value of the rouble is hitting exports from Azerbaijan to Russia too.
Fuad Garibov from Khachmaz, a northern town in Azerbaijan said he has decided to hold on to a consignment of dates that he had intend to sell in Russia. “If I sell it now, it’s obvious that I will lose, he said.
“I hope that something will change soon.”
Azerbaijan’s economy is also reliant on oil and gas sales. With energy prices halving over the last six months, the Azerbaijani economy, which once looked so buoyant, is looking strained.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 215, published on Jan. 21 2015)
JAN. 15 2015 (The Conway Bulletin) — The market may have priced in
another devaluation but Kairat Kelimbetov, head of the Kazakh
Central Bank, said he would not allow fluctuations in the currency.
Mr Kelimbetov has been saying for months that despite the falling
Russian rouble and a drop in oil prices, the Kazakh tenge would not
devalue.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 215, published on Jan. 21 2015)
>>Tajik CBank can’t afford aggressive defence of somoni again>>
JAN. 20 2015 (The Conway Bulletin) — Russia’s rouble crisis is pushing Tajikistan to the brink of bankruptcy. The Tajik Central Bank has said that it spent half the country’s reserves last year trying to prop up its currency against the falling rouble.
These are worrying times for Central Asia’s governments. A combination of falling oil prices and Russia’s economic turmoil is pressuring their own finances.
Remittances from Russia have fallen sharply in value over the past six months or so, undermining economies in Tajikistan and Kyrgyzstan especially.
Central Banks have been spending heavily to try to bolster their currencies against a falling Russian rouble but this has proved difficult.
Despite spending half its national reserves — there is now less than $500m left in the Central Bank’s reserves — the value of the Tajik somoni has still fallen over 10% against the US dollar. Inflation has also risen.
All the signs are that 2015 will be complicated too. What the Tajik government can’t afford, though, is another costly battle to defend the somoni.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 215, published on Jan. 21 2015)
JAN. 13 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank said it spent $1.13b in December supporting its national currency — the manat — counter a falling Russian rouble and a drop in global oil prices. This represents about 8% of its total currency reserves.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 13 2015 (The Conway Bulletin) — Car imports to Kazakhstan from Russia have jumped in the past two months to 2,859 from 2,005 during the same period in 2013, Kazakh media reported quoting government officials. The upturn is linked to the currency discrepancies. The rouble has nose-dived but the Kazakh Central Bank has kept the tenge strong.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 214, published on Jan. 14 2015)
JAN. 13 2015 (The Conway Bulletin) — Kyrgyzstan’s currency reserves dropped by 12.5% in 2014 to just under $2b, the head of the Central Bank, Tolkubek Abdygulov, was quoted by media as saying. The drop was due to Central Bank interventions to try to prop up the Kyrgyz som, under pressure from a falling Russian rouble.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 214, published on Jan. 14 2015)
>>Russian rate rise triggers Armenian reaction>>
DEC. 23 2014, (The Conway Bulletin) — Armenia’s Central Bank raised its key interest rate to 8.5% from 6.75%, a move widely interpreted as an attempt to keep up with its Russian counterpart.
Inflation in Armenia is creeping up, mainly because of anticipated price pressure triggered by joining the
Kremlin-led Eurasian Economic Union which ties the Armenian economy even more closely into the Russian economy.
In November Armenia’s annualised inflation was 2.6% up from 2.2% in October and economists have said that this trend is likely to accelerate.
But the Russian Central Bank’s defence of its rouble currency is also giving its allies a headache.
In mid-December to stop a run on the rouble, the Russian Central Bank raised interest rates overnight to 17% from 10.5%. This has forced its closest allies to follow.
Armenia is in a tight spot.
It is so reliant on Russia that it has become a virtual satellite state, and more so after it signed a deal to enter the Eurasian Economic Union.
Adapting to the Kremlin’s Eurasian Economic Union and the impact of this political-economic move will dominate Armenia in 2015.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 213, published on Jan. 7 2015)
JAN. 1 2015, (The Conway Bulletin) — Turkmenistan devalued its currency by 19% overnight to try and counter a slump in oil prices.
This was the first manat devaluation in seven years, underlining just how heavily former Soviet states have been hit by the drop in the price of oil and subsequent drop in the value of the Russian rouble.
Bloomberg News quoted data from the Turkmen Central Bank that showed the manat trading at 3.5 to the dollar, a drop from 2.85.
Oil prices are now around $50/barrel, half the price they were trading for earlier in 2014.
Turkmenistan’s economy has boomed over the past few years thanks mainly to gas sales. The price of gas is closely linked to the price of oil. Its main client is China but Europe has also been looking to woo Turkmenistan and so have states in the Gulf and the Indian Subcontinent.
The problem for Turkmenistan is most of its gas contracts are pegged to global markets.
Turkmen president Kurbanguly Berdymukhamedov promised plenty of new major infrastructure projects in 2015.
With falling revenues from oil and gas sales, these may now be at risk.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 213, published on Jan. 7 2015)