Tag Archives: currency

IMF assesses Kazakh economy

MAY 7 2014 (The Conway Bulletin) – The Kazakh Central Bank should relax its monetary policy and allow the tenge to appreciate, media quoted the IMF as saying after a field trip to Kazakhstan.

It said that the tenge was now undervalued and that the narrow band that the Central Bank anchors the currency in should be widened.

In February, the Kazakh Central Bank suddenly cut the value of the tenge by 20%, a move the IMF said could trigger inflationary pressure.

The assessment is hardly a ringing endorsement of the Kazakh Central Bank and its policies.

It appears that Kazakh consumers, also, agree with the IMF. Fresh data showed that since December the amount of savings held in US dollars has increased by around a third. People are clearly nervous of the tenge.

The IMF also highlighted a much talked about weakness in the Kazakh economy; the high proportion of non-performing loans. Roughly a third of all loans are considered non- performing and this, the IMF said, had to be cut.

A senior manager in the currency sector in Almaty said that both relaxing the band that the tenge was held in and cutting the proportion of non-performing loans was wishful thinking by the IMF.

“Such a decision would mean creating panic in the society,” he said on condition of anonymity of the IMF’s proposal to relax the currency band.

“The government wants the opposite. Everything has to be calm and quiet. Increasing the range would enhance speculative moves in the currency market.”

ENDS

(News report from Issue No. 184, published on May 14 2014)

The Tajik somoni slips against the dollar

APRIL 28 2014 (The Conway Bulletin) — Tajikistan’s somoni currency fell against the dollar, media reported, continuing its general depreciation. Like other currencies across the region, the somoni has been under pressure because of a decline in the value of the Russian rouble. Kazakhstan devalued its tenge by 20% in February.

ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 182, published on April 30 2014)

Fitch says Kazakhstan’s bad loans will increase

APRIL 1 2014 (The Conway Bulletin) — The 20% devaluation of the tenge earlier this year will trigger an increase in bad debt, Roman Kornev, director of financial institutions at Fitch Ratings said. The Kazakh government wants to reduce the amount of non-performing loans on banks’ portfolios.

ENDS
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(News report from Issue No. 178, published on April 2 2014)

Government spending grows in Kazakhstan

MARCH 26 2014 (The Conway Bulletin) — Kazakhstan’s parliament approved increased government spending to compensate people for the 20% drop in the value of the tenge and counter rising inflation.

Overall, Kazakh government expenditure will increase by 6% to $39.1b.

The increase is more evidence of the inflationary effect of the currency devaluation on Feb. 19. Shops have increased their prices and large corporations have boosted salaries.

To calm public frustration, Kazakh president Nursultan Nazarbayev promised to increase pensions, public sector salaries and student grants. Parliament’s decision to increase government spending is simply making good on these promises.

The Kazakh government will fund the budget increase by transferring cash from the National Fund, where it keeps profits from oil revenues.

ENDS
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(News report from Issue No. 178, published on April 2 2014)

EBRD issues Eurobond in Georgian lari

MARCH 17 2014 (The Conway Bulletin) — Looking to give Georgia’s currency a boost, the European Bank for Reconstruction and Development (EBRD) issued its first debt in lari. The 2-year bonds were worth 50m lari ($29m). The placement appears to follow an EBRD strategy. Last month it issued 1-year bonds worth 2b Armenian drams ($5m).

ENDS
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(News report from Issue No. 176, published on March 19 2014)

Kyrgyz som stabilises after turmoil

MARCH 11 2014 (The Conway Bulletin) — The weakening of the Kyrgyz som fuelled economic uncertainty just as winter was thawing — the most dangerous time of the year for any government in Kyrgyzstan. Kyrgyzstan has experienced two violent revolutions since 2005, both in the spring.

According to the Kyrgyz Central Bank the som has lost 10% of its value against the US dollar this year.

The Central Bank blamed external politico-economic factors for the fall of the Kyrgyz som — mainly Kazakhstan’s sudden decision to devalue its own currency on Feb. 11 by 20% and the Russian rouble’s drop after Russia’s military intervention in Ukraine. It also said, though, that speculators had panicked people on March 3 by selling US dollars for 59 soms, 5 soms above the official exchange rate.

Although the Central Bank declared the som crisis over on March 4, confidence in the currency is thin.

“The dollar affects everything,” said Habib Tursun as he sold milk from his brother’s farm to Bishkek residents out of his car boot. Although Mr Tursun’s operation doesn’t involve imports, except for petrol, his family save in dollars. To counter the fall in the som, he said that he had added 3 soms onto the price of a litre of milk, now 38 soms.

“Our milk is still cheaper than in the shops. If their prices are rising, why shouldn’t ours?” he said.

Prices for a number of imported products have risen 10-20%, according to local media.

This inflation may increase dissatisfaction with President Almazbek Atambayev and his government. It could also force the government to delay planned energy tariff rises and reduce the value of important remittances from migrants in Russia.

ENDS

(News report from Issue No. 175, published on March 12 2014)

The Kyrgyz som falls against the dollar

MARCH 4 2014 (The Conway Bulletin) — Kyrgyzstan’s som currency fell sharply in value against the US dollar. A Conway Bulletin correspondent in Bishkek reported that some banks had stopped selling US dollars and that black market traders were selling the Greenback at inflated prices.

ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 174, published on March 5 2014)

Experts question Kazakh Central Bank’s ability to control

FEB. 20 2014 (The Conway Bulletin) — If the Kazakh Central Bank’s decision to devalue the Kazakh tenge by 20% on Feb. 11 came as a nasty surprise, the admission by Kairat Kelimbetov, the Bank’s chief, that he had only learned of the policy shift the night before came as a frightening shock.

Readers left floods of angry comments on news websites on the apparent ineptitude of Mr Kelimbetov.

“If he didn’t know, it means he doesn’t work at all! What an irresponsible (man),” wrote one user.

The Kazakh Central Bank is supposedly in charge of the country’s monetary policy and the constitution enshrines its independence.

And yet here was the Mr Kelimbetov saying that he’d only been informed about a policy change at the last moment. Many suspect that Kazakh President Nursultan Nazarbayev, in power since 1991, influences monetary policy.

Even so, it was a PR disaster for Mr Kelimbetov, said Eldar Madumarov, an economics professor in Almaty.

“It used to be regarded as the most independent and reliable Central Bank among all post-Soviet countries, including Russia,” he said. “All he’s been saying undermines his credibility.”

The Kazakh President, with approval from the Senate, appoints the Central Bank chief. Mr Kelimbetov took over as head of the Kazakh Central Bank in October last year from Grigory Marchenko, who was considered a steady hand.

Mr Kelimbetov’s reputation appears to be in tatters as Svetlana Dzhalmagambetova, a senator, voiced when she faced him at a Senate hearing on the devaluation.

“We need to know if you lack professionalism or ethics, it’s one of the two,” she said according to reports. “You misled not only the people of Kazakhstan, but also their representatives here in the Parliament.”

(News report from Issue No. 173, published on Feb. 26 2014)

Rumours of bankruptcy dent Kazakh banks’ reputation

FEB. 18 2014 (The Conway Bulletin) — Betraying ordinary Kazakh’s nervousness and distrust after the devaluation of the tenge on Feb. 11 by 20%, rumours of a banking collapse spread fast via SMS and triggered a run on several banks.

The banks — Bank Tsenter Kredit, Alliance Bank and Kaspii Bank — all denied that they were in danger of collapsing.

At branches of Kaspii Bank, though, hundreds of people still queued throughout Feb. 18 and Feb. 19 to withdraw their savings despite assurances from the Central Bank that there was no reason to panic.

Saltanat was one of roughly 100 people queuing to withdraw their savings from a Kaspii Bank branch in Almaty.

“They said there won’t be any problem, but why should I believe them?” he said. “They said nothing about the devaluation either. They’re not going to take our money away!”

Confidence in Kazakhstan’s banking sector and the tenge is low.

(News report from Issue No. 172, published on Feb. 19 2014)

Businesses and consumers worry after Kazakh tenge devaluation

FEB. 15 2014 (The Conway Bulletin) — The sudden 20% devaluation of the Kazakh tenge on Feb. 11 generated anger and despair across Kazakhstan.

Police detained roughly 50 protesters in rare antigovernment demonstrations in Astana and Almaty and rumours of an imminent collapse triggered a run on several high street banks.

In central Almaty the manager of a store selling underwear could barely constrain herself. She had no customers and was angry.

“This devaluation is terrible and we don’t want it. In our store, prices will not increase, but the cost of living will surely soar,” she said.

At a clothing store in a busy shopping mall, Gaukhar shared this view.

“This could turn into a nightmare,” said the shop assistant. “While prices will undoubtedly increase, we haven’t heard a word from our directors to raise our wages.”

One of the big fears for Kazakhstan’s policy makers is that rather than making the economy more competitive, the devaluation will simply stoke inflation. Some large industries, including the steel plant owned by the Luxembourg-based ArcelorMittal has already said it will increase its workers’ salaries by 10%.

There were mixed signals in Almaty. Many shopkeepers said that they hadn’t yet put up their prices but that they soon would.

“There’s already been a significant change in prices of between 500 and 1,000 (tenge) per pair of shoes,” said Assel as she tendered to her shop in Almaty’s Green Bazaar. “We’ve seen a lower turnout of customers this past week. They come in, try on the shoes but then go out empty-handed.”

Assel’s shoes were imported mainly from China and an increase of 500 to 1,000 tenge per pair represented a rise of roughly 20%.

(News report from Issue No. 172, published on Feb. 19 2014)