JAN 5 2016 (The Conway Bulletin) – Annualised inflation in Kazakhstan hit 13.6% for the 12-months to the end of December, its highest rate for six years, the National Statistics Committee said. Inflation shot up in October after the tenge depreciated. In September, annualised inflation in Kazakhstan measured just 4.4%.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 5 2016 (The Conway Bulletin) – Georgia exported 39% less wine in 2015 than it did in 2014 because of a worsening recession in Russia and a protected civil war in Ukraine. In a press release, Georgia’s National Wine Agency said that wine exports to China had increased by 22% to 2.7m bottles but that sales to Russia had fallen by 51% to 18.3m bottles and to Ukraine by 56% to 3.4m bottles.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016 (The Conway Bulletin) – The Kyrgyz Central Bank sold $9.1m to prop up its ailing currency, media reported, its first intervention in 2016. Like the other countries of Central Asia, Kyrgyzstan has sold millions of dollars of its reserves to support its som. In December, media reported that it had intervened 17 times to prop it up.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN 6 2016 (The Conway Bulletin) – The proportion of cash in banks in Kazakhstan held in foreign currencies rose to 77.5% in November from 76.4% a month earlier, media reported quoting the Central Bank, highlighting people’s lack of confidence in the national currency. It has been a long-held Central Bank policy to try to persuade people to keep their savings in tenge. The tenge, though, lost around half its value in 2015.
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(News report from Issue No. 262, published on Jan. 8 2016)
DEC. 22 2015 (The Conway Bulletin) – Armenia’s Central Bank cut its key interest rate by one percentage point to 8.75%, its lowest level for 11 months, because of a slowdown in inflation. It said that annualised inflation for the 12-months to the end of November measured 0.6% compared to 1.3% a year earlier. Slow global economic growth and low commodity prices have stalled prices in Armenia.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016 (The Conway Bulletin) – The Tajik Central Bank imposed currency withdrawal restrictions on account holders as the Tajik somoni currency continued to lose value, media reported. It limited cash withdrawals to $400 per person. In December, the government closed down exchange kiosks, blaming them for pressuring the value of the somoni.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 7 2016 (The Conway Bulletin) – The World Bank cut its economic outlook for Kazakhstan in 2016 to 1.1% because of sustained low oil prices. It had earlier predicted growth of 1.9% in 2016, up from 0.9% in 2015. Kazakhstan has been hard hit by the sudden and sustained fall in the price of oil.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016 (The Conway Bulletin) – Georgia’s President Giorgi Margvelashvili has started searching for a successor to Giorgi Kadagidze who will complete his 7-year term as head of the Central Bank in February. Mr Margvelashvili’s nominee will have to be voted in by the Parliament before he or she can assume office.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 7 2016 (The Conway Bulletin) — The New Year did not change the fortunes of currencies in the South Caucasus and Central Asia. All currencies are still suffering against a strong US dollar and Central Banks are intervening to prop them up.
Undoubtedly, the most notable decision came just before the holidays when Azerbaijan ditched its currency peg to the dollar and let the manat slide. After a 48% fall, the currency found its equilibrium at 1.55/$1. It is now trading at 1.57/$1.
In Kazakhstan, the tenge recovered towards the end of December, but it slid to 345/$1 in January.
Tajikistan witnessed the worst start of the year, with its somoni currency falling 2.5% in the first week of January, trading at 7.17/$1. Notably, exchange points have been charging a premium of 8-10% on currency transactions in the past few weeks.
In Kyrgyzstan the Central Bank has kept the som stable at 75.9/$1 by intervening several times.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 8 2016 (The Conway Bulletin) – Both Kazakhstan and Azerbaijan ditched their currencies’ peg to the US dollar in 2015, triggering sudden and sustained depreciation of their currencies.
These were tough, but necessary calls by their Central Banks as these currencies were over-valued compared to oil and the Russian rouble.
What happens next differentiates Azerbaijan and Kazakhstan.
Kazakhstan has allowed, with the odd intervention, its currency to devalue. The Azerbaijani Central Bank, by contrast and very much in keeping with the tight way that the country is run, appears determined to anchor the manat more-or-less at its current rate against the US dollar. The rhetoric may be of liberalisation but the actions are of a conservative and uptight Central Bank.
And this comes across in other ways too. A couple of weeks after the devaluation, Azerbaijan imposed a rule that only people presenting their official ID could change more than $500 into foreign currencies. This could be the first of many exchange controls.
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(Editorial from Issue No. 262, published on Jan. 8 2016)