FEB. 11 2014 (The Conway Bulletin) — Kazakhstan’s Central Bank devalued the tenge by 20% despite months of denial that it was contemplating a move. Pressure has been mounting on the tenge and other currencies in emerging markets because of a strengthening US dollar.
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(News report from Issue No. 171, published on Feb. 12 2014)
FEB. 11 2014 (The Conway Bulletin) — On what has been dubbed “Black Tuesday”, Kazakhstan’s Central Bank devalued the tenge by 20%.
The sudden move was designed to relieve pressure on the currency, despite Central Bank chief Kairat Kelimbetov saying for months that a devaluation was not on the cards. Last month he even urged Kazakhs to save more in tenge.
With the United States preparing to increase interest rates, the dollar has been strengthening and currencies in emerging markets have been under increased pressure. It had only been a matter of time before the Kazakh tenge flinched but the sudden drop will still have major consequences.
Mr Kelimbetov’s credibility has been badly damaged. He’s only been in the job since October so he’s still a relative novice. Longer term, the depreciation shows the tenge as weak and unstable.
Most of Kazakhstan’s imports are designated in dollars and so inflation is expected to rise fast; the depreciation of the tenge has also wiped out millions of dollars of ordinary Kazakhs’ savings.
This is the second sharp tenge devaluation in five years and there is a real chance that ordinary Kazakhs won’t trust the currency again.
In Almaty, some ATM machines stopped working for a couple of hours after the announcement and shops closed for the day. The public was worried.
Ainur, an Economics undergraduate said she was “concerned about a possible hike of her tuition fees. Gulmira, the administrator of a busy grocery shop, said prices had not yet increased but would soon. Near to her shop, electronics stores had taken down their price tags. Their websites were also closed for business.
On twitter, there has been talk of demonstrations against the devaluation. Feelings are running high.
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(News report from Issue No. 171, published on Feb. 12 2014)
JAN. 21 2014 (The Conway Bulletin) — Brushing aside growing speculation over the Kazakh economy, Kairat Kelimbetov, head of Kazakhstan’s Central Bank, said there were no plans to devalue the Kazakh tenge. Media reports quoted Mr Kelimbetov after analysts openly questioned whether the tenge was too expensive.
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(News report from Issue No. 168, published on Jan. 22 2014)
OCT. 8 2013 (The Conway Bulletin) — Azerbaijan may ditch pegging its manat currency to the US dollar in the medium term and move to a free float, Khagani Abdullayev, deputy head of Azerbaijan’s Central Bank said in an interview with the Conway Bulletin.
The Azerbaijani manat has been pegged to the US dollar since March 2009. The Central Bank hitched it to the US dollar to secure it during the financial crisis. Now, though, the scenario has changed and Azerbaijan’s economy is starting to grow quickly again, putting the currency under pressure.
“In the near future the plan is the continuation of the peg while a managed float is planned for the mid-term,” Mr Abdullayev said after giving a lecture in Washington DC.
On the economy, he also said cash still made up roughly half the transactions in Azerbaijan.
“The Central Bank will continue to increase its efficiency as Azerbaijan transitions to a more cashless society. Currently 50% of M3 is made up of cash,” Mr Abdullayev said. M3 is a technical reference to money supply.”
Islamic Banking has become increasingly prevalent in Asia and Mr Abdullayev said that although Azerbaijan wouldn’t actively promote this brand of finance, it would play a role in the future.
“The development of Islamic finance in Azerbaijan is a long term objective,” he said.
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(News report from Issue No. 158, published on Oct. 30 2013)
SEPT. 6 2013 (The Conway Bulletin) — A drop in savings held in Kazakh tenge in July showed people were losing confidence in Kazakhstan’s currency, the respected kapital.kz said. Central Bank data showed 350b tenge was withdrawn from bank accounts in July, reducing the proportion of savings held in tenge to about 61%, down from 66%.
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(News report from Issue No. 151, published on Sept. 11 2013)
AUG. 27 2013 (The Conway Bulletin) — Azerbaijan continued to buy gold in July, news agencies quoted the IMF as saying, part of its stated plan to increase its bullion reserves. As well as buying gold, Azerbaijan has also said that it wants to increase its portfolio of property and currencies.
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(News report from Issue No. 150, published on Sept. 2 2013)
AUG. 28 2013 (The Conway Bulletin) — Keen to strengthen control over the tenge, the Kazakh Central Bank switched from managing the value of its national currency against the dollar to using an aggregated basket of currencies.
The US dollar will still make up 70% of the new basket, Kazakh Central Bank chief Grigory Marchenko said, but the euro will also make up 20% and the Russian rouble 10%.
This system is more in line with a currency basket used by the Russian Central Bank to determine the value of the rouble.
In July, the Central Bank came under pressure to devalue the tenge after it dropped to 154 to the dollar. Since then it has rebounded to about 152 tenge to the dollar.
This currency basket will give the Kazakh Central Bank more room to intervene in the markets to defend the value of its currency. It scrapped a managed corridor value for the tenge in March 2011.
Two years earlier, in February 2009 during the global financial crisis, the Kazakh Central Bank devalued the tenge by 21%.
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(News report from Issue No. 150, published on Sept. 2 2013)
AUG. 28 2013 (The Conway Bulletin) — Kazakhstan’s Central Bank ditched its US dollar peg for the Kazakh tenge in favour of a currency basket. Central Bank chief Grigory Marchenko said the currency basket breakdown would be: 70% US dollar, 20% euro and 10% Russian rouble.
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(News report from Issue No. 150, published on Sept. 2 2013)
JULY 25 2013 (The Conway Bulletin) — Kazakhstan’s Central Bank scotched rumours of an impending devaluation of the tenge. The tenge is tightly bound to the Russian rouble which is relatively stable. In Feb. 2009, the Kazakh central bank devalued the tenge by 21% shortly after their Russian counterparts devalued the rouble.
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(News report from Issue No. 145, published on July 29 2013)
TASHKENT/Uzbekistan, JUNE 10 2013 (The Conway Bulletin) — The black market currency traders in Taskhent’s bazaars are hardly inconspicuous.
“Dollars, dollars. Russian roubles,” they say.
Huge wads of cash change hands as people exchange dollars for Uzbek sums. The black market currency trade in Uzbekistan is big business and well established.
With the largest note worth a mere 1,000 sum (roughly 50 cents), the piles of money can be hefty. The trade is visible, but the police in Tashkent’s bazaars don’t step in; they’re taking a cut.
This currency black market has traditionally offered better rates than the banks. Exchanging $1,000 legally will give you about 2 billion sum, while on the black market you’ll receive around 2.7 billion sum.
Since February, the Uzbek government has banned people from buying cash dollars legally at all. Those needing hard currency must deposit money on debit cards which they can only use abroad.
When this ban on buying dollars came into force it sparked wild black market rate fluctuations and speculation that the government was out to smash this lucrative illegal trade. Such talk was short-lived, however, and the shadowy forces controlling the black market made a fortune on the exchange rate fluctuations.
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(News report from Issue No. 138, published on June 10 2013)