Tag Archives: economy

Currencies: US dollar, Kazakh tenge

DEC. 16/18 2015 (The Conway Bulletin) — In the weeks leading up to an interest rate increase by the US Federal Reserve Bank on Wednesday, Central Banks in the South Caucasus and Central Asia fretted about possible repercussion on their own currencies.

Janet Yellen, who chairs the Fed, said interest rates would go up by 25 basis points from 0.25% to 0.50%. The Fed had postponed the decision for months and a rate increase was widely expected.

What will happen now to Emerging Markets? The US dollar will inevitably become more attractive to investors, which are likely to pull capital away from Emerging Markets back to the US.

The day after the rate increase, the value of the dollar grew by 1% against six major currencies. This, in turn, could further depress the price of commodities and pressure currencies in Central Asia and the South Caucasus.

Shortly after the Fed’s decision, the Georgian Central Bank also raised its interest rates to 8%, up from a level of 7.5%. And the following morning the Central Bank of Azerbaijan issued a statement saying it expects the new rate to affect the currency markets in the region.

Kazakhstan had been on holiday while all this was happening, celebrating the 24th anniversary of its independence, but the impact on the Central Bank and the tenge have been tangible for weeks. The Central Bank twice skipped its monthly policy meetings in November and December, leaving analysts puzzled. On Friday, when Kazakhstan woke up from its festivities, the tenge hit an all-time low of 342.5/$1.

ENDS

(News report from Issue No. 261, published on Dec. 20 2015)

Kazakhstan shifts to tenge

DEC. 8 2015 (The Conway Bulletin) – At a government meeting, Kazakh Central Bank chief Daniyar Akishev said all prices should be given in tenge. One of Mr Akishev’s main objectives is to make the tenge more prominent and to de-dollarise the economy. Many goods and services — rent, hotel rooms and luxury goods — are still priced in US dollars.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Georgia and China strengthen relations

DEC. 10 2015 (The Conway Bulletin) – Georgia and China have agreed to begin free trade talks, an important step in strengthening relations. China has become an important economic player in Georgia. Georgia’s economy minister, Dimitri Kumsishvili, said he wanted to see Georgian wine and other agricultural goods exported to China.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Turkmen President criticises head of Central Bank

DEC. 8 2015 (The Conway Bulletin) -Turkmenistan’s President Kurbanguly Berdymukhamedov reprimanded the head of the Central Bank and the head of the Commodity Exchange Agency at a government meeting, the Trend news agency reported.

Although details of the dressing- down were thin, as expected from Turkmenistan, it does indicate that, perhaps, Mr Berdymukhamedov is feeling the economic strain.

There have been a number of reports coming out of Turkmenistan over the year that show the country’s economy is under pressure from a drop in energy prices, a recession in Russia and a fall in value of currencies across Emerging Markets. At the start of the year the Central Bank devalued the manat currency by 19%. Last month, dissident websites reported that currency controls had been imposed.

And now this.

Trend reported that Mr Berdymukhamedov had told Central Bank chief Merdan Annadurdiyev and the head of the commodities exchange, Amandurdi Ishanov, that their work had been substandard. The report didn’t give any specific examples.

Mr Berdymukhamedov is keen on giving ministers a public dressing down. These reprimands generally betray some of his thinking on the country’s development. By focusing on the Central Bank and the commodities exchange, Mr Berdymukhamedov is showing his frustration with the economy.

With the distinct lack of accurate economic data flowing out of Turkmenistan, this is important.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Currencies: Kazakhstan’s tenge, Kyrgyzstan’s som

DEC. 11 2015 (The Conway Bulletin) — The Kazakh tenge keeps hitting record lows against the US dollar, trading around the 310/$1 mark in the second half of this week, and there is little indication that it will reverse this trend. The Central Bank has said it wants to scrap its previous monetary policy and find new solutions. The message it sent was, in essence: “we will play it by ear.” So much for restoring confidence in its monetary policies.

The Kyrgyz som stopped its fall and found its equilibrium at 75.6/$1 this week, the first stable week in months.

All other currencies were steady this week.

Next week, the US Federal Reserve Bank will hold a policy meeting. Analysts are bracing for the first interest rate rise since 2009.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Kyrgyzstan CBank changes rules

DEC. 9 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank changed the reserve requirements for its commercial banks to reflect the less stable state of the Kyrgyz som. It reduced the proportion of minimum reserves held in som by 4.5% to 4% of a bank’s total reserves and also increased the requirement to keep 12.5% of the bank’s cash in foreign currency, up 2.5%.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Real estate price rise in Kazakhstan

DEC. 7 2015 (The Conway Bulletin) – In tenge terms, prices for new housing in Kazakhstan have risen on average by 12% in the year to the end of November, media reported quoting the national statistics agency. The rise is a reflection of the devaluation of the tenge and also of rising inflation. The tenge has lost around 40% in value this year.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

ADB supports Tajikistan

DEC. 7 2015 (The Conway Bulletin) – The Manila-based Asian Development Bank approved a grant of $53.4m and an additional loan of $6.6m to Tajikistan to help it develop private businesses. The ADB said the grant was designed to bring in programmes that would reduce business costs as well as increase protection for small companies.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

Kyrgyz remittances drop

DEC. 10 2015 (The Conway Bulletin) – Remittances to Kyrgyzstan were 30% lower in the first 10 months of the year compared to the same period in 2014, said the head of the Central Bank, Tolkunbek Abdygulov. This shortfall, triggered by a recession in Russia and a fall in the value of the som, has blown a $400m hole in the national budget.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)

FDI looks set to rise again in Georgia

DEC. 9 2015 (The Conway Bulletin) – Foreign direct investment in Georgia, an important part of its economy, was 17% less in the first nine months of this year compared to the same period in 2014, the Georgian statistics agency said.

Georgia’s FDI rate has only just started to recover from the war against Russia in 2008 and the 2008/9 Global Financial Crisis.

In total, net inflow of investments in Georgia measured over $1b between January and September. And this net inflow has picked up pace throughout the year. In Q1 it measured $175m, in Q2 $355 and in Q3 $489m.

The transport and communications sector received by far the greatest volume of inflows with $218m invested in Q3. Construction has been up and down. For most of 2013 it recorded near zero FDI before recording large growth in 2014.

ENDS

(News report from Issue No. 260, published on Dec. 11 2015)