Tag Archives: economy

Currencies: Kazakhstan’s tenge, Kyrgyzstan’s som

NOV. 20 2015 (The Conway Bulletin) — The Kazakh tenge was steady this week, trading at around 307.2/$1, off an all-time low against the US dollar of 311/$1 earlier in November.

There is still much speculation by analysts on just how monetary policy in Central Asia’s biggest economy is going to change under new Central Bank chief Daniyar Akishev. He said that inflation was too high and appeared to make this his priority.

With this in mind, expect another interest rate rise at the Central Bank’s policy meeting next month — if the policy wonks don’t cancel it again. There are, though, two urgent problems, it seems to me, with the Kazakh monetary policy. People don’t know what it is or whether it works.

The new key interest rate — overnight repo rates — was only introduced in September. It was raised in October to 16% from 12% and then ignored in November when the Central Bank cancelled its policy meeting at the last moment. Does this interest rate have any credibility? Does the market even care about it? It doesn’t appear to have had any effect so far.

And Mr Akishev appeared to acknowledge as much when he said that a fall in oil price would send the tenge tumbling further. Oil prices, outside the Kazakh Central Bank’s control, are the driver of tenge value and not its key interest rate.

In neighbouring Kyrgyzstan, the som currency did continue to set new records against the US dollar. It hit an all-time low on Friday of 72.5/$1 versus 71.9/$1 at the start of the week. On Oct 1, the som had been valued at 68.8/$1, meaning that it has lost over 5% of its value in the past seven weeks.

As the Bulletin reports in the main section of the newspaper, information coming out of Turkmenistan is that its manat currency has devalued and that the government has placed restrictions on the amount of cash people can withdraw from the banks. Earlier this month, The Bulletin also reported on the devaluation of the Uzbek soum.

Even staunchly controlled currencies are feeling the pressure, it seems.

And over in the South Caucasus, it is a similar story. Since its sharp 33% devaluation in February, the Azeri manat has been kept steady but analysts have increased chat of a need to devalue again.

Both the Armenian dram and the Georgian lari were steady through the week.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kumtor posts upbeat Q3 results, boosting Kyrgyzstan

NOV. 18 2015 (The Conway Bulletin) — Canadian miner Centerra Gold said production and revenue at Kumtor, Kyrgyzstan’s largest gold mine, increased in the third quarter, countering continued low gold prices and giving the Kyrgyz economy a welcome boost.

Production grew to 3.2 tonnes of gold, up 9% from 2.9 tonnes in Q3 2014. This compared against relatively depressed gold prices meaning that Centerra’s revenues grew by 3%. Gold prices have fallen since the start of November by 6% to a six-year low of $34.37/gram.

In a statement on its website, Ian Atkinson, Centerra’s CEO, said: “Financially, the Company is in good shape with cash, cash equivalents and short-term investments of $537m or

$461m, net of debt, at September 30, 2015.”

Importantly for Kyrgyzstan, Centerra’s tax contributions also rose. In the first nine months of 2015, Centerra paid $98.7m, a 20% increase compared to 2014.

Centerra is the largest taxpayer in Kyrgyzstan. Output at the Kumtor gold mine makes up 10% of GDP.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Tax on petrol to double in Kazakhstan

NOV. 17 2015 (The Conway Bulletin) – Seemingly trying to defy logic, the Kazakh government said it wanted to double tax on petrol but that the price rise would not add to inflationary pressure in the economy.

The day after economy minister Yerbolat Dossayev said that he wanted to increase tax on petrol, the new head of the Kazakh Central Bank Daniyer Akishev also said inflation this year in Kazakhstan was likely to be above even the upper 8% estimate.

The tenge has almost halved in value since the Central Bank ditched its US dollar peg in August, forcing prices up across economy.

Shortly after the tenge lost its US dollar peg, the government also ditched it price control over petrol, allowing prices to increase to match the tenge devaluation.

And now Mr Dossayev has said that he wants tax on a tonne of petrol to rise to 10,500 tenge ($16.70) from 5,000 tenge ($34.10) which would equal, roughly, to an increase of around 5% for consumers.

Petrol prices have already risen around 25% this year and any further increase will be unpopular.

As for inflation in general, Mr Akishev, made Central Bank chief at the start of the month, said targeting inflation was now his highest priority.

“Our task now is to ensure stable inflation and get back to the range of 6-8% in 2016,” he said.

The problem for Kazakhstan is that with oil prices continuing to be suppressed, pressure builds on the tenge to fall further which means that inflationary pressure also builds.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kazakhstan’s Samruk Kazyna sells stakes

NOV. 18 2015 (The Conway Bulletin) — Kazakhstan’s sovereign wealth fund Samruk Kazyna said that it would sell stakes in two of its power related companies, its nuclear agency Kazatomprom and its power holding company Samruk-Energo, within a year, part of a wide-scale IPO of state- owned companies.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kazakh economy barely grows

NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s economy grew by only 1% in the first 10 months of the year, economy minister Yerbolat Dosayev told a government meeting, far below even the more pessimistic estimates of a year ago. Mr Dosayev said industry had contracted by 2.2%.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Remittances fall to Georgia

NOV. 16 2015 (The Conway Bulletin) – Remittances to Georgia in October were 27% lower, at $90m, than during the same month in 2014, the Central Bank reported, an indication of the regional economic malaise. Remittances from Russia had nearly halved.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kazakhstan’s trade turnover with Eurasian Union states drops

NOV. 13 2015 (The Conway Bulletin) – Kazakhstan’s trade turnover with member states of the Eurasian Economic Union – that’s Russia, Belarus, Armenia and Kyrgyzstan – has dropped by nearly 26% to $12.1b in the first nine months of this year compared to the same period in 2014, its statistics agency said.

The data is more evidence of the sharp downturn in the region’s economy. It is particularly jarring for Kazakh president Nursultan Nazarbayev who has been one of the main architects and biggest supporters of the Eurasian Economic Union. It was hoped that the trade bloc would stimulate trade but instead, by anchoring outlying economies to Russia, it has hampered it.

A sharp drop in oil prices and Western-imposed sanctions have tipped Russia into a recession and forced its rouble currency to drop in value.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Kazakhstan cuts back envoys

NOV. 18 2015 (The Conway Bulletin) – In what would amount to a major change of Kazakh government policy, President Nursultan Nazarbayev said that he was considering cutting the number of diplomatic missions to save cash to soften the blow of the current economic downturn. Previously, Kazakhstan’s foreign ministry has been opening outposts in South America, Africa and south-east Asia.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Tenge could fall says Kazakh CBank

NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s new Central Bank chief Daniyar Akishev said the tenge could fall further if oil drops below $40/barrel. The tenge has lost half its value this year. The price of Brent oil is around $44/barrel.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)

Inflation rises in Armenia

NOV. 20 2015 (The Conway Bulletin) – Prices in Armenia grew by 4.4% in the first 10 months of the year, media quoted the National Statistics Service as saying, pointing to high overall inflation for 2015.

Inflation has forced its way back onto the top of Central Bankers’ agenda this year. A collapse in local currencies’ values against the US dollar has triggered a sharp rise in prices for energy imports and domes- tic electricity production.

Inflation in Armenia is probably lagging inflation in neighbouring Georgia because the government has chosen to suck up the cost of the electricity price rises rather than pass

it on to consumers after a series of major demonstrations in the summer. In Georgia, the government has more successfully passed the cost of the electricity production on to consumers.

But, importantly, with another two months of the year to be factored into the final calculation, inflation in Armenia is already running above the initial estimates in the 2015 budget.

Trade turnover is also down, 20% lower in the first 10 months of the year compared to the same period in 2014. This is generally in-line with other economies across the Central Asia and South Caucasus region.

ENDS

(News report from Issue No. 257, published on Nov. 20 2015)