Tag Archives: economy

Currency: Kazakh tenge, Kyrgyz som

OCT. 1 2015 (The Conway Bulletin) — It’s hard to believe that Kazakhstan has really moved to a free-floating currency market. The roller-coaster of the past 40 days has hit the Central Bank’s credibility. Investors and citizens alike are wary of the potential consequences of their tenge-denominated portfolios.

And over the last two weeks, the Central Bank has sold around $1b to keep the tenge away from the frightening 300/$1 floor it momentarily touched on Sept. 16.

The tenge has since traded at around 271/1$. In August, the Central Bank chose to move away from a dollar peg of around 188/$1 to avoid draining its reserves. Now, it seems, the tenge has found another, unofficial, peg.

In other countries, the situation was fairly stable this week. The Kyrgyz som kept its rate through the week at around 69/$1. The Georgian lari held below 2.39/$1.

In Tajikistan, the Central Bank seems to be allowing a weekly 0.5% decline for the somoni, now at around 6.5/$1.

And finally, in a recent Central Bank survey, 41% of Tajikistan’s population is in favour of letting the somoni float free.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Markets: Interest rates up in Kazakhstan, Kyrgyzstan and Georgia

OCT. 2 2015 (The Conway Bulletin) — The three countries in the Central Asia and South Caucasus region with currencies floating freely (or partially so) have all increased their key interest rate.

Kazakhstan was the last to do so, bringing its key interest rate to 16% from the previous level of 12%. The 12% mark had only been set at the start of September, highlighting just how seriously the Kazakh Central Bank had underestimated the threat from inflation in its initial calculations. The Kyrgyz Central Bank raised its benchmark rate to 10%, up by 2 percentage points. Last week, Georgia increased rates to 7% from 6%.

The bottom line is that all three countries fear inflation. Kyrgyzstan has tried to hold off, while the Central Bank intervened lightly in the currency market to defend the som, but both foreign trade and remittances from abroad have declined, putting the Kyrgyz economy in an uncomfortable position.

Although probably necessary, these measures might not be enough to avoid climbing inflation in the coming months.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Kyrgyzstan increases interest rate

SEPT. 29 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank increased its key interest rate by 2% to 10% to combat rising inflation. The Kyrgyz interest rate has yo-yoed this year. It started at 10.5%, rose to 11%, was cut to 9.5% and then to 8% before being increased again.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Azerbaijan’s manat declines

SEPT. 29 2015 (The Conway Bulletin) – Pressure is building on Azerbaijan’s Central Bank to allow its manat currency to decline gently rather than prop it up by spending billions of its US dollar reserves. Vahid Ahmadov, an MP and deputy head of parliament’s economy committee, questioned the current US dollar peg for the manat. The CBank devalued the manat by a third in Feb.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

IMF raises Armenia’s 2015 GDP growth rate

SEPT. 26 2015, YEREVAN (The Conway Bulletin) — The International Monetary Fund (IMF) raised its economic growth forecast for Armenia in 2015 to 2.5% from an earlier 1% projection, Mark Horton, the IMF mission chief to Armenia, told a news conference.

Although the upward revision of Armenia’s growth forecast will be welcomed by officials and will give the government some breathing space as it tries to navigate its way through an increasingly deep regional economic crisis, Mr Horton emphasised that the revision was due to a handful of one-off factors.

“Among the non-recurrent factors which will not happen next year are the launching of a copper factory, unprecedented favourable climate conditions and the good results from the agriculture sector,” he told journalists at a press conference.

Armenia’s agriculture ministry said earlier this month that the sector had grown by nearly 15% in the first seven months of the year compared to the same period in 2014. Also, a new copper mine that started operations at the end of 2014 has contributed to a 35% increase in overall metals and mining output.

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Georgia picks banking board

SEPT. 21 2015 (The Conway Bulletin) – The members of Georgia’s new Banking Supervisory Board are all close allies of former PM Bidzina Ivanishvili, drawing immediate allegations of cronyism. The Banking Supervisory Board replaces the Central Bank as the authority over commercial banks. The head of the board is Konstantine Sulamanidze, former CEO of Progress Bank in which Mr Ivanishvili owns a stake.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Uzbek-Kyrgyz trade halves

SEPT. 22 2015 (The Conway Bulletin) – In Jan.-July 2015, trade turnover between Uzbekistan and Kyrgyzstan halved to $78.4m compared to the same period in 2014, according to Kyrgyz customs data. The figure shows the impact of the economic downturn.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Currency: Kazakh tenge, Kyrgyz som

SEPT. 25 2015 (The Conway Bulletin) — Last week’s decision by the US Federal Reserve Bank not to modify interest rates was welcomed across Central Asia and the South Caucasus, where currencies performed well.

The Kazakh tenge, the Georgian lari and the Kyrgyz som all recouped 2% against the dollar and a timid 1% improvement was also noted in Armenia and Azerbaijan. Markets are still weak, however. Had it not been for Central Bank interventions for millions of dollars in Kazakhstan ($620m in one week), Georgia and Kyrgyzstan (around $30m each), their currencies would have kept falling.

By the end of the week, the Kazakh tenge was trading up 2.5% against the US dollar at 264/$1, the Kyrgyz som was up 2% at 69/$1 and the Georgian lari was up 2.4% at 2.39/$1.

Also, and this is interesting, a study from researchers at the International Monetary Fund found that the lack of confidence in domestic currencies and ingrained behaviours have hindered any policy of de-dollarisation across Central Asia and the South Caucasus.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Trade turnover drops in Armenia

SEPT. 22 2015 (The Conway Bulletin) – Trade turnover in Armenia dropped by over 5% in the first eight months of the year compared to the same period in 2014, media reported quoting the country’s statistics office. Media also reported that consumer prices had risen by 4.8%. Both indicators show the pressure that the Armenian economy is under.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakh CBank intervenes again

SEPT. 21 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank bought $200m-worth of tenge to protect its currency after it broke through the psychologically important 300/$1 barrier. Despite pledging not to intervene in the value of the tenge, the Kazakh Central Bank has spent over $700m this month on its defence.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)