Tag Archives: currency

Kazakhstan’s $1 stores profit in tough economic times

ALMATY, APRIL 26 2016, (The Conway Bulletin) — A chain of shops touting themselves as ‘$1 stores’ has opened up in Kazakhstan, one of the few retailers apparently prospering during an increasingly vicious economic downturn.

The stores, which operate under the Russian franchise Odna Tsena, carry a classic pared-back budget look and only sell products for 300 tenge (90 cents). Under the slogan “Buy without stress!”, they sell everything from washing up liquid and toilet rolls, to processed food and toys.

And they are busy. On a midweek trip to Odna Tsena, which means One Price, in Almaty, a Bulletin correspondent spoke to four shoppers. They were all women and all appreciated the shop’s discount value.

Nataliya said that she visited the shop almost weekly.

“There is a lot of choice, it’s very comfortable. I usually buy plates and dishes and some toys for my child,” she said. “Compared to other shops it is much better.”

This store opened in December 2015, in the middle of an economic storm which has forced a 50% devaluation of the tenge, pushed up inflation to levels not seen since the Global Financial Crisis of 2008/9 and pressured cost-cutting companies to scrap thousands of jobs.

Across the world, discount stores have tended to prosper during the tougher times and Odna Tsena is bullish about its own prospects.

Botagoz Tlemisova, a director at Odna Tsena, said that the chain planned to open 50 more stores across Kazakhstan in the next three years.

“We’ve been operating for just a few months, but already we’ve seen the loyalty of our customers. Our research has shown that more than 50% of shoppers come back to our shops every two to three weeks,” she told media.

In the Almaty shop, Svetlana said she had popped in because she had heard about the knock-down prices.

“I am surprised that everything here has one price, and it is cheap. It is very relevant nowadays when prices are rising on everything,” she said. She also said she would return soon.

ENDS

(News report from Issue No. 278, published on April 29 2016)

EBRD praises Kazakh economy

APRIL 8 2016 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) has defended Kazakhstan’s economic record over the past couple of years despite a sharp currency devaluation, rising inflation and thousands of job losses, media reported. Media quoted the EBRD’s chief in Kazakhstan, Janet Hackman, saying that Kazakhstan was not faced with an economic crisis because of steps it had taken recently to join the WTO and move to an inflation targeting monetary policy.

ENDS

(News report from Issue No. 276, published on April 15 2016)

Editorial: Uzbek buses

APRIL 8 2016 (The Conway Bulletin) – People in Uzbekistan will find it harder to pay both their utility bills and bus fares from this month.

The government has ordered price increases across the board from April 1, signalling latent inflation in its economy.

Utility prices went up around 8.5% but bus prices have risen by 20% and this is going to be significant. Public transport in Tashkent delivers several hundreds thousand passenger journeys every day, making bus ticket prices a highly sensitive issue.

The city government blamed high fuel prices for the new ticket price of 1,200 sum ($0.41 at the official rate).

Officially, the Uzbek sum has lost only 10% of its value over the past six months against the US dollar, but Black Market rates tell a different story.

The Uzbek currency is spiralling downwards and this will push up inflation. Accurate economic data is hard to come by from Uzbekistan but there is no arguing with the higher bus prices. This is the accurate inflation measure that is needed to gauge price rises in Uzbekistan.

ENDS

(Editorial from Issue No. 275, published on April 8 2016)

Editorial: Kazakh and Kyrgyz de-dollarisation

APRIL 8 2016 (The Conway Bulletin) – Central Banks in Central Asia are boasting about de-dollarisation these days, painting a rosy picture of their success in combating their economies’ dependence on the greenback.

A closer look at the stats, however, reveals that a combination of heavy interventions in the currency markets and interest rate tweaking were the main drivers of healthier Kazakh tenge and Kyrgyz som.

But now Central Banks have to grapple with inflation, which continues to grow, and demand for credit, which continues to shrink.

Central Banks propped up local currencies, against a US dollar that has now slowed its rise against Emerging Markets currencies and commodities.

Restrictions on exchange points, bans on pricing goods in dollars and public calls for confidence have all contributed to curbing the use of dollars.

But Central Banks might have run out of options now and they need to steer away from “crisis mode” if they want to really restore confidence in their still ailing currencies.

ENDS

(Editorial from Issue No. 275, published on April 8 2016)

Kyrgyzstan bans price labels in foreign currencies

APRIL 2 2016, BISHKEK (The Conway Bulletin) — Kyrgyzstan banned labelling goods for sale in anything other than Kyrgyz som, a move it said would help strengthen the national currency and reduce its economy’s reliance on US dollars.

Since a crash in the value of local currencies in Central Asia and the South Caucasus last year, de-dollarisation has become a buzzword among Central Banks.

In Kyrgyzstan, the authorities have concentrated on persuading more people to use som over US dollars to buy goods. And this now includes banning shopkeepers from pricing goods in US dollars.

The punishment for pricing goods in US dollars still hasn’t been announced but it will be a challenge to the authorities to impose the ban successfully.

Zhumakadyr Akeneyev, a former head of oil traders association and now an economic commentator, said de-dollarisation was a positive step.

“Finally, for the first time since independence, we have turned our face to the national currency,” he said.

Other Kyrgyz said that while they broadly welcomed the move, they were also sceptical that it would work.

“I like this idea. Many people, who borrowed money from the banks in foreign currencies, suffered from devaluation of som,” said 25-year-old Saltanat. “However, I think the government should leave some space for use of foreign currencies too.”

ENDS

(News report from Issue No. 275, published on April 8 2016)

Kazakh Central Bank says that confidence in tenge has returned

APRIL 5 2016, ALMATY (The Conway Bulletin) — Kazakhs have increased the amount of tenge they are keeping in bank accounts, suggesting that they now trust the currency once again despite it halving in value over the past seven months, Kazakhstan’s Central Bank said.

In February, Central Bank data showed that the amount of tenge saved in banks rose to 1.53 trillion tenge ($4.5b), up 5% from January. Significantly, too, the proportion of tenge as savings grew to 22% of the total, up from 20% in January.

Analysts said that two factors had contributed to this renewed confidence in the tenge. The first was that this year, the tenge has actually strengthened against the US dollar to around 340/$1 compared to an all- time low in mid-January of 390/$1.

In March, Kazakhstan’s Central Bank heavily intervened in the currency market, buying $1.2b on the Kazakh Stock Exchange, around 2.6 times more than it bought in February.

This, together with high liquidity ensured by capital held at the Single Pension Fund, helped to improve the tenge’s position, analysts said.

“The Central Bank now faces the problem of too much liquidity and too high interest rates,” Askar Akhmedov, senior analyst at Halyk Finance, part of one of the largest Kazakh banks, said in a report.

Secondly, analysts said the Central Bank’s policy of increasing interest rates on tenge savings in banks to 14% from 10%, in addition to dropping the interest paid on foreign currency savings to 2% from 3% was working.

On the streets of Almaty this more positive view of the tenge was, generally, reflected.

A pensioner said: “It is our national currency, and I trust it but the 50% drop in its value was unpleasant, especially for pensioners.”

Most people that the Bulletin’s correspondent in Almaty spoke to agreed, and it will be a relief to President Nursultan Nazarbayev and the Kazakh government that confidence in the tenge is returning after a torrid 2015.

There were some who took a more cautious approach, though.

“Nowadays the position of the tenge is unsteady and it may weaken again. If I had to choose between tenge and dollar to put money in deposit, I’d probably choose dollar,” said Aigerim, a music teacher.

ENDS

(News report from Issue No. 275, published on April 8 2016)

Kazakhstan- based Tethys losses rise

MARCH 29 2016 (The Conway Bulletin) – Guernsey-based Tethys Petroleum said its losses more than quadrupled in 2015 compared to the previous year, mostly due to the depreciation of some of its Kazakh assets. Tethys lost $74.6m in 2015. According to the company’s yearly report, the tenge depreciation also dented revenues. The tenge lost around half its value against the US dollar in 2015.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Dollarisation grows in Georgia

MARCH 25 2016 (The Conway Bulletin) – The Georgian Central Bank said the dollarisation of Georgia’s economy continued to rise in February, as US dollar deposits grew to 68.4% of the total, the highest level since October 2010. A high dollarisation of deposits suggests that bank customers’ trust in the local currency in waning.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Kyrgyz CBank injects more som

MARCH 30 2016 (The Conway Bulletin) – The Kyrgyz Central Bank continues to buy US dollars in the currency market because demand for foreign currency is shrinking and, the Bank’s chief Tolkunbek Abdygulov told a press conference, people and businesses need improved som liquidity. The Central Bank bought around $62m in March.

ENDS

(News report from Issue No. 274, published on April 1 2016)

Georgia picks CBanker

MARCH 16 2016 (The Conway Bulletin) – Georgia’s Central Bank picked Koba Gvenetadze, a former IMF banker, to be its chief, replacing Giorgi Kadagidze whose term finished in February. The following day, President Giorgi Margvelashvili approved Mr Gvenetadze’s 7-year term at the Bank. Georgia’s economy has been under increased pressure from the falling value of the lari and rising inflation linked to a fall in oil prices and recession in Russia.

ENDS

(News report from Issue No. 272, published on March 18 2016)