Tag Archives: economy

Business comment: Halyk Bank & The Money Markets

SEPT. 18 2015 (The Conway Bulletin) — On Sept. 17, for the first time the Central Bank of Kazakhstan published data on the activities of Kazakh banks in the currency market. This decision greatly pleased liberal economists and advocates of transparency in Kazakhstan’s banking sector. But it didn’t please everybody. In one table, the Central Bank listed the amount of US dollars that banks

purchased and sold the day before. If a bank buys a large quantity of US dollars, it suggests that it may be engaging in speculation activities, or at least this is what the public could read into the data. By unveiling turnaround data only, the Central Bank irked Halyk Bank, who ranked first for volume traded.

The next day, in a rare complaint, Halyk Bank said the figures were “incomplete and misleading”.

Despite having traded $58m (around 12% of the whole banking sector), Halyk said it had been a net seller by $34m.

This is a much more patriotic figure.

And the bank, owned by powerful businessman Timur Kulibayev and his wife Dinara Nazarbayeva, now wants the Central Bank to publish the detailed numbers since Aug. 17, the day before the first adjustment to the tenge/dollar exchange rate, which led to the decision to let the tenge off its dollar peg, effectively spurring a new devaluation.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Remittances fall in Georgia

SEPT. 15 2015 (The Conway Bulletin) – Money transfers to Georgia in August measured $84.4m, a drop of 35% from 2014, media quoted the Central Bank as saying. Russia and Greece are the main generators of remittances for Georgia.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Turkmenistan signs electricity deal

SEPT. 11 2015 (The Conway Bulletin) – Turkmenistan has signed a deal with Afghanistan to increase electricity exports, media reported quoting various government officials after a meeting between the two sides. The deal cements cooperation between Turkmenistan and Afghanistan.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Georgia approves Tbilisi electricity price rise

SEPT. 3 2015, TBILISI (The Conway Bulletin) — Following earlier electricity price rises in Georgia’s regions, the state regulators approved a similar price increase in the capital.

For the Georgian Dream, the ruling coalition, the price rise means they have barely been able to fulfil one of their promises from the 2012 parliamentary election – to cut the price of electricity and to keep it low.

But, as Akaki Tsomaia, economics professor at the University of Georgia explained, the plunging value of the lari had forced the regulators to agree to the price rise.

“Georgia is experiencing a 45% depreciation of its currency against the US dollar. Electricity and gas providers in Georgia have no other way than to increase the price of these services. Otherwise we will definitely have a major electricity shortage,” he told the Bulletin.

Still, this assessment, which is widely shared, didn’t stop the opposition UNM party blaming the coalition.

“The absence of professionalism led us to this point,” UNM’s deputy chairperson Nika Melia told TV broadcaster Rustavi-2.

Electricity prices have triggered protests in the region, most notably in Armenia where thousands protested earlier this year and forced the government to waive price rises.

In Georgia which is known for its street level politics, however, the population seems to have accepted the rise more quietly although some people did expect protests shortly.

Vladimir, an IT specialist walking along Tbilisi’s central promenade said: “People will probably start next month once they get bills.”

Irakli, 37, who was waiting at a bus stop, agreed but he said that politics, was the key driver of social unrest.

“We’ve taken to the streets so much in the recent two decades, but for other reasons,” he said. “But it all accumulates and only needs one non- social spark to explode.”

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

China buys Tajik somoni

SEPT. 4 2015 (The Conway Bulletin) – China agreed to buy $470m worth of Tajik somoni, media reported, a currency swap designed to prop up Tajikistan’s weakening currency. The somoni has been losing value this year.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Teachers in Kazakhstan to receive 50% pay rise

SEPT. 8 2015, ALMATY (The Conway Bulletin) — Kazakhstan’s government said that it would increase salaries for teachers by 20-50% depending on their qualifications, another indication that the devaluation of the tenge is spurring inflation.

Announcing the pay rise at a school in Astana, deputy PM Berdybek Saparbayev said that it showed the government cared about its workers. “We have very good news for our teachers,” media quoted him as saying. “Salaries will be increased from 20 to 50% starting from 2016.”

The Kazakh Central Bank has devalued the tenge twice since February 2014.

It is now worth around 40% less than it was before the first devaluation and economists have been warning that inflation will shoot up.

Companies have already been raising salaries and it was only a matter of time before the government put up pay for its thousands of employees.

Other key workers, such as doctors and nurses, have also been promised large tenge pay rises.

The problem for the Kazakh government is that with oil prices low and production declining, it may struggle to pay or all the rises.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Currency: Kyrgyz som, Kazakh tenge

SEPT. 11 2015 (The Conway Bulletin) — The Kazakh tenge and the Kyrgyz som dropped to record lows this week, as economies in Central Asia and the South Caucasus continued to show structural weaknesses.

By the end of Friday, the tenge traded at around 264/$1, down from 240/$1 at the start of the week. That’s a drop of 10%. The Kyrgyz som fared slightly better but still dropped through the 67/$1 barrier. A week earlier it had traded at around 65.5/$1.

Over the border in Tajikistan, the somoni held its own. This may have had something to do with a massive cash injection from China. It agreed to buy 3b yuan ($470m) worth of somoni in a so called currency swap deal. This is a thinly disguised mechanism to prop up the ailing somoni which has lost 17% of its value this year.

In the South Caucasus the currencies were broadly stable, although the Georgian lari lost some ground, falling to around 2.40/$1 compared with a price of around 2.36/$1 a week earlier.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Business comment: FDI in Kyrgyzstan

SEPT. 9/10 2015 (The Conway Bulletin) — Between January and July this year, Canada increased its flow of Foreign Direct Investment into Kyrgystan by 90 times.

For Canada, read Centerra Gold, the Toronto-listed company that is part-owned by the Kyrgyz government. It owns the Kumtor gold mine in the east of the country, Kyrgyzstan’s main economic driver.

And it seems that this investment and the subsequent 49% increase in gold exports has helped Kyrgyzstan to post GDP data in Jan. – Aug. 2015 that shows growth of 7% from the same period last year. If capital flows are encouraging, however, foreign trade has shrunk significantly. The volume of import-export fell by 15% in the first 7 months of 2015.

In 2015, the fall of the som currency has led to lower purchasing power for Kyrgyzstan, and the government recently announced that Kyrgyzstan will inevitably face inflation for the next few months.

But as long as foreign investors retain their confidence in Kyrgyzstan, the country will be able to defend itself from the growing regional economic crisis.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Azerbaijani C.Bank spent $1.2b in August defending manat

SEPT. 4 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank spent nearly $1.2b defending the value of it manat currency in August despite devaluing it by a third earlier in the year.

With oil prices, the key driver of Azerbaijan’s economy, stubbornly hovering around 7-year lows, the data will add more pressure onto the currency and suggests that another devaluation may be possible. Across the Caspian Sea, oil-exporter Kazakhstan effectively devalued its currency for a second time last month after trying to defend it for over a year.

Reuters quoted a high-placed source at the Azerbaijani Central Bank as saying: “August 2015 was difficult from a financial point of view. The economies of large countries of the world declined and the price of oil also fell on world markets, which influenced the state of the manat.”

The Central Bank data showed that its reserves had fallen to $7.31b by the end of August from $8.5b at the end of July.

The South Caucasus and Central Asia region is trying to cope with a sharp decline in its economy. Suppressed oil prices and a recession in Russia have dragged down growth. Azerbaijan with its dependency on oil has suffered more than most.

The latest data means that the Azerbaijani Central Bank has spent 42% of its total reserves this year.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Azerbaijani oil exports to Russia rise

SEPT. 4 2015 (The Conway Bulletin) – SOCAR, the Azerbaijani state oil and gas company, said in the first 8 months of 2015 it shipped 930,671 tonnes of oil to Russia, up from 677,785 tonnes during the same period in 2014. Azerbaijan- Russia relations have improved over the past year as Azerbaijan’s relations with the West have faltered.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)