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)
SEPT. 2 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank picked the overnight repo rate as its benchmark interest rate and main tool for manipulating monetary policy, setting it at 12%.
The decision came two weeks after the Central Bank allowed the tenge to free float, abandoning the peg to the US dollar. The free-float pushed the value of the tenge down by 23%, the second devaluation in less than two years.
“This rate is aimed at directing nominal rates in the money market and will become a key instrument of the credit and monetary policy, in the new inflation-targeting regime,” the Central Bank said in a statement.
The tenge traded at around 240 to $1 immediately after the new interest rate was announced, having strengthened from 252 to $1 after the US dollar peg was ditched in August. By comparison, in February 2014, before the first devaluation, the tenge traded at 155 to $1.
Analysts welcomed the relatively high benchmark interest rate, saying that the tenge needed this level of support.
Sabit Khakimzhanov, head of research at Halyk Finance, said that the Central Bank may even need to increase this key interest rate by one percentage point to 13%.
“The interest rate in the money market is the only instrument left at the disposal of the NBK (National Bank of Kazakhstan) to manage inflation and the exchange rate,” he said.
“Only by keeping the rates credibly high, that is, at a level sufficiently high to enforce the necessary discipline and for a sufficiently long time. The interest rate corridor 12-14% meets these requirements.”
Other analysts said the high interest rate may encourage Kazakhs to keep their money in the bank.
“The high rate levels are clearly seen as securing the banking system from deposit outflows and anchoring inflation expectations,” Dmitry Polevoy, a Moscow-based economist at ING Groep NV, told Bloomberg News.
Previously the key interest rate had been the ineffective refinancing rate set at 5.5%.
Earlier this year the Kazakh government said that targeting inflation was going to be the main driver of its future economic policies.
The problem is that with the tenge devaluing and with oil prices remaining stubbornly low, the Kazakh government has already said that inflation is likely to climb above its 6-8% corridor target.
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) – Kazakhstan’s Central Bank said that it was introducing a new key interest rate that would be its main tool for manipulating monetary policy. It set the new refinancing rate at 12%.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 28 2015 (The Conway Bulletin) – Tajik president Emomali Rakhmon ordered his government to take urgent action to mitigate the impact of the worsening economic crisis hitting Central Asia. In one of his most frank omissions that Tajikistan’s economy is rapidly worsening, Mr Rakhmon told his ministers to adopt import substitution policies. Tajikistan has been hit by the drop in remittances from Russia.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 28 2015 (The Conway Bulletin) – The value of imports into Kyrgyzstan fell by nearly 17% in the first half of the year, media reported by quoting official statistics. The data, while not giving specifics, still highlighted the economic slowdown in the region. Kyrgyzstan, like the other Central Asian countries, has been dealing with dropping remittances from Russia and a sharp fall in the value of its currency.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 20 2015 (The Conway Bulletin) – Shares in Kazakh copper miner KAZ Minerals, formerly called Kazakhmys, rose by 20% on the London stock exchange immediately after Kazakhstan’s government said that it would allow its tenge currency to free-float. The announcement knocked 23% off the value of the tenge, giving exporters a much needed boost.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 244, published on Aug. 21 2015)
ALMATY/Kazakhstan, AUG. 21 2015 (The Conway Bulletin) — Kazakhstan gave up its defence of the tenge by ditching a peg to the US dollar which had cost it billions to enforce, a move that knocked 23% off the currency’s value .
Businesses, policy makers and analysts will now be watching for a subsequent rise in inflation, as well as possible social unrest, in Kazakhstan.
At a government meeting broadcast on national television, Kazakh President Nursultan Nazarbayev said that the depreciation of the Russian rouble and a sharp fall in oil prices in the past year meant that it was becoming far too costly to defend the tenge.
“Let us face it, this is a necessary measure, there was no other alternative. Crisis always brings about change,” he said.
This is a major policy shift for Kazakhstan which had been alone in the Central Asia and South Caucasus region in stubbornly defending its currency. Perhaps the sudden devaluation of the Chinese yuan earlier this month was the trigger for the Kazakh devaluation.
Kazakh exporters had been struggling as their products became more expensive.
The devaluation will also damage the reputation of the Central Bank and the tenge. This is its second devaluation in 18 months. Since February 2014, the tenge has lost 39% of its value.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 244, published on Aug. 21 2015)
AUG. 6 2015 (The Conway Bulletin) – Data from Georgia’s ministry of economy showed that the number of people flying between Tbilisi and Moscow had risen by three-quarters to around 143,000 people in the first seven of 2015 compared to the same period in 2014. Russia and Georgia have resumed direct air links, severed after a brief war in 2008.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on August 7 2015)
JUNE 30 2015 (The Conway Bulletin) – The Kazakh Central Bank bought a 10% stake in Kazmunaigas from the country’s sovereign wealth fund Samruk Kazyna for 750b tenge ($4b), a move analysts said was designed to help the state- owned energy company pay off debts generated by a sharp fall in oil prices.
This is the second reorganisation of Kazmunaigas since June. It earlier announced the sale of half its 16.8% stake in the Kashagan oil project to Samruk-Kazyna for $4.7b.
Analysts at Halyk Bank, a Kazakh bank, said the latest move shifted debt once again from Kazmunaigas to Samruk Kazyna to the Central Bank.
“If the first transaction raised the net debt of Samruk-Kazyna, the second lowered Samruk- Kazyna’s net debt, and the credit risk. By divesting of Kazmunaigas, Samruk-Kazyna reduced the most expensive part of its debt,” Halyk Finance senior analysts Sabit Khakimzhanov and Gulmariya Zhapakova said in a note to clients.
Delays at Kashagan and a sharp fall in oil prices have worsened Kazmunaigas’ financial affairs.
But, although unprecedented, the Central Bank’s purchase will change little in Kazakhstan’s oil sector. The two transactions may have helped Kazmunaigas achieve a better financial position in the short term, but both moves are temporary.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on Aug. 7 2015)
JULY 28 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank cut its main interest rate to 8% from 9.5% because of a slowdown in inflation. The Central Bank said annualised inflation was now hovering around 6%, nearly half the level seen at the beginning of the year. Kyrgyzstan, like the rest of the region, has been coping with the fall out of a decline in the Russian economy.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 242, published on August 7 2015)