SEPT. 1 2015 (The Conway Bulletin) – Russian car manufacturer AvtoVAZ said it would increase prices in the Kazakh market by 3%. “The new pricing policy is due to changing macroeconomic factors and increased competition,” a company official told kapital.kz. Kazakhstan has devalued its currency and inflation is rising. This is the fourth price rise in 2015.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015 (The Conway Bulletin) – Umut Shayakhmetova, chairman of Halyk Bank, said the devaluation of the tenge last month would hit businesses hard and that the impact would be heavier than a devaluation in 2014. “It will affect the economy. Our clients will experience a drop in sales,” media quoted her as saying at a press conference.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 1 2015 (The Conway Bulletin) – From Sept.1 government salaries and pensions in Uzbekistan increased by 10%, media reported, another indication that inflation is accelerating across the region.
Uzbek president Islam Karimov ordered 26, ostentatiously to improve the quality of life for ordinary people but in reality to keep up with price inflation in basic foodstuffs, utilities and petrol.
Like the rest of the region, Uzbekistan’s currency has fallen sharply in value and remittance from Russia have roughly halved.
The Uzbek government usually increases salaries and pensions once or twice a year. The previous salary increase of 12% came in December 2014.
As well as boosting salaries, the government is also increasing import duties on major staples ranging from meat and poultry, to dairy and fruits by around 30%. University tuition fees have risen by 15%. Part of the thinking behind the increase in duties is to ring-fence agricultural production in Uzbekistan during the economic downturn.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015 (The Conway Bulletin) – Media in Kyrgyzstan quoted reports from north Turkmenistan which said long queues were forming at petrol stations after rumours emerged that prices were going to rise. Petrol prices have risen across Central Asia because of a sharp fall in the value of local currencies.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015, TBILISI (The Conway Bulletin) — Rising food and utilities prices pushed up inflation in August to a year-on-year level of 5.4%, its highest level for four years Geostat, the Georgian statistics agency, said.
Analysts have been warning that the drop in the value of the Georgian lari over the past year would pressure inflation. These concerns appear to have been borne out by the data which has showed a steady increase in prices in Georgia since March.
Geostat said that food prices in Georgia rose by an average of 2% in August and utilities by 4.4%. Importantly dairy products, a staple of the Georgian diet, rose by nearly 10%.
Also, electricity prices rose by 11.4% in August, mainly due to the fall in the value of the lari. Rising electricity prices across the region have triggered discontent, especially in neighbouring Armenia where wide- spread street protests forced the government to ditch most price increases.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 2 2015 (The Conway Bulletin) – The Kyrgyz som lost 5.4% of its value on Sept. 1 falling to 66 som to $1, the biggest fall by any currency in Central Asia and the South Caucasus over the past week and the lowest value for the som against the US dollar for at least a decade.
This was also the som’s biggest one-day loss since March 2014. The Kyrgyz government, like the rest of Central Asia, has been battling to defend its currency against a sharp fall in the value of the Russian rouble, still the main driver of regional economic growth.
It’s unclear what pressured the Kyrgyz som to fall so severely but a few days earlier the head of the Central Bank Tolkunbek Abdygulov had said that the currency had dropped by 10.3% in 2015 despite the the government spending nearly $180m to protect its value.
“The National Bank will have enough reserves to avoid sharp fluctuations in the exchange rate of the som. Now the situation on the market is stable. There are no reasons for anxiety and panic,” media quoted Mr Abdygulov as saying on Aug. 25.
His statement and the subsequent fall in the value of the som suggest that the Kyrgyz Central Bank may be struggling to maintain its value.
Across the border in Kazakhstan, the Kazakh tenge has been stable at a level of 242/$1 during the past week, down from the a high of 252/$1 in August. The Kazakh Central Bank’s decision to adopt a new benchmark interest rate policy on Sept. 2, did not appear to have a significant impact on the exchange rate.
Elsewhere in Central Asia, the Tajik somoni and the Uzbek sum remained substantially unchanged. Currencies in the South Caucasus kept their against the US dollar throughout the week, fluctuating by just 1%.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015 (The Conway Bulletin) – Georgia’s parliament voted to overrule a veto by President Giorgi Margvelashvili that would have blocked the adoption of a controversial bill that stripped the Central Bank of its supervisory powers over the commercial banking sector. International organisations have criticised the bill as politically-motivated. The Central Bank has argued with the government over economic policy.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 1 2015 (The Conway Bulletin) – Russia’s health department blocked the transit of 40 tonnes of dairy products from Latvia and Germany from travelling across its territory to Uzbekistan. Reports said the shipment had broken transit rules. European producers have dodged sanctions on Russia by sending products to Uzbekistan which they then send onto Moscow.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 4 2015 (The Conway Bulletin) – Timing is everything and fortune favoured me last month.
By chance, I flew into Almaty 24 hours after Kazakh President Nursultan Nazarbayev and Central Bank chief Kairat Kelimbetov had released the tenge from its US dollar peg.
This effectively triggered a 23% devaluation of the currency. I would be able to experience Ground Zero in the latest Emerging Markets currency crisis. If you’re a journalist, this is a good thing.
But if my timing had been fortunate, Mr Nazarbayev and Mr Kelimbetov hadn’t been so lucky. They had overseen an earlier devaluation of the tenge, let’s call this Devaluation 1, which hadn’t worked out. The current currency crisis, Devaluation 2, is a direct result of this mismanagement.
Without warning Mr Nazarbayev and Mr Kelimbetov had devalued the tenge by 20% in February 2014, hoping to make the Kazakh economy more competitive. The timing was poor, though, and within weeks Russia had become a pariah state in the eyes of the West because of its support for rebels in east Ukraine. Sanctions followed, denting Russia which is still the main economic driver in Central Asia. Within another six months oil prices collapsed and the Russian rouble went into free-fall.
The original Nazarbayev-Kelimbetov devaluation strategy, was undermined.
And this forced them into a corner. Defying economic logic and trying to rescue their own pride, they defended the new tenge-dollar peg despite neighbouring currencies sinking and oil prices flat-lining.
In the end, Mr Nazarbayev and Mr Kelimbetov bowed to the inevitable. The tenge is now around 39% cheaper than it was in January 2014.
On the streets of Almaty, ordinary Kazakhs generally greeted the devaluation with a shrug. There was also a palpable sense of relief. A second devaluation was always going to happen. The day after the devaluation, the run on the exchange kiosks was for tenge which signalled that most people thought it had bottomed out and wouldn’t devalue further.
And, crucially, it felt as if people had seen it all before.
We know what is going to happen next. The fallout from Devaluation 1 will guide us through the fallout from Devaluation 2. There will be price inflation, followed by salary rises. There will be job losses and the competitiveness generated by the devaluation will recede.
The major difference now is that the tenge currency is, theoretically at least, floating free.
By James Kilner, Editor, The Conway Bulletin
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 31 2015 (The Conway Bulletin) – Georgia’s economy grew by about 3% in the 12 months to the end of July, Geostat, the Georgian statistics agency, said. Geostat said that this was roughly inline with June and above April and May’s growth rate. The economies of the South Caucasus have been struggling this year to deal with the falling rouble and low oil prices.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)