Tag Archives: inflation

Food prices rising in Uzbekistan

NOV. 12 2014 (The Conway Bulletin) – The Uzbek sum currency has fallen to its lowest levels against the US dollar in independent Uzbekistan’s 23 year history, pushing up the price of food and threatening social stability.

On the Black Market, an essential measure of currency rates, the exchange rate in Tashkent hit the 3,450 sums to $1. The skyrocketing currency price is a mirror of Russia’s economic troubles.

A Tashkent resident told the Conway Bulletin that a kilogram of mutton now costs between 25,000 and 30,000 sums, compared to 20,000 sums in the summer.

Prices of bread, sugar and grain-based cereals have also risen by roughly 25% over the past three months, he said.

“As if the recent increase in utility costs was not frustrating enough, the government’s inaction to stem price increases because of a foreign currency adds insult to injury,” the source said.

The Tashkent resident was referring to a 10% increase imposed by the government on utility prices on Oct. 1.

This insight is important because it provides a first- hand snapshot of how frustration is building in Uzbekistan over food price increases and the rising cost of utilities.

Ordinary Uzbeks have also had to put up with fuel and gas shortages. Social pressure is building.

ENDS

(News report from Issue No. 209, published on Nov.19 2014)

Kazakh tenge celebrated a not-so-happy birthday

NOV. 19 2014 (The Conway Bulletin) – In Kazakhstan, November 15 is the Day of the National Currency, a little-known holiday for workers in the financial sector.

With the Kazakh tenge under pressure again despite a 20% devaluation earlier this year, they and the national currency will be grateful for the rest.

The tenge was born in 1993, after Kazakhstan’s independence from the Soviet Union.

It had a bumpy ride with initial inflation, matching concerns about the viability of an independent Kazakhstan. The exchange rate against the dollar jumped from an initial 4.75 to 35 within two months.

A dollar peg provided some stability — even if it was shaky — for the tenge during the second half of the 1990s but the Russian and Asian crises forced a new market- driven devaluation. Between April and September 1999, the tenge lost one third of its value against the greenback.

A corner, though, was turned at the start of the 21st century and with Kazakhstan maturing as a country so did its currency. Fiscal responsibility helped keep down inflation in the early 2000s, oil prices slowly rose, giving Kazakhstan’s fledging energy sector a boost.

Then came two devaluations of 20%. The first in Feb. 2009 and the second five years later.

With the US Federal Reserve easing its policy of cheap money and preparing to raise interest rates, pressure on emerging currencies, including the tenge, is likely to increase.

Aged 21, the tenge has already had an eventful existence.

ENDS

(News report from Issue No. 209, published on Nov.19 2014)

Inflation increases in Kyrgyzstan

NOV. 6 2014 (The Conway Bulletin) – The Asian Development Bank (ADB) has predicted that inflation in Kyrgyzstan will hit 10% in 2015 after it joins the Russia-led Eurasian Economic Union. The biggest jump in prices, the ADB said, will be a 30% rise in petrol when prices are brought into line with Kazakhstan and Russia.

ENDS

(News report from Issue No. 208, published on Nov.12 2014)

Kazakh President unveils economic plan

NOV. 11 2014 (The Conway Bulletin) – In a speech to the nation, Kazakh president Nursultan Nazarbayev ordered Kazakhstan’s government to spend more money on infrastructure projects to counter the drag caused by a slowing Russian economy and falling oil prices.

The hastily arranged policy speech caught observers by surprise. Mr Nazarbayev usually waits until his state-of- the-nation speech in January to unveil new policy.

“The tough times for which we prepared ourselves with the National Oil Fund have come. It’s time to use these reserves,” he said during his combative address.

Kazakhstan has amassed a sovereign wealth fund of roughly $77b to counter downturns in commodity prices — the economy is mainly reliant on oil and gas exports — as well as to defend the tenge currency when it is under pressure from a falling rouble.

And Mr Nazarbayev is acutely aware that economic progress is a cornerstone of his popularity.

Mr Nazarbayev pledged to inject $3b every year into Kazakhstan’s economy, during 2015/17. He also said that inter-governmental banks have pledged to match this cash injection.

“The investment from the National Fund must be necessarily accompanied by structural reforms,” he said. “This money will be channelled to develop transport, energy, industrial and social infrastructure.”

ENDS

(News report from Issue No. 208, published on Nov.12 2014)

Georgian inflation falls

NOV. 3 2014 (The Conway Bulletin) – Inflation in Georgia eased to an annual rate of 3.4% in October, down from 4.8% in September, the national statistics office reported. Although other economies in the region are suffering with the downturn in Russia’s economy, Georgia’s is relatively buoyant.

ENDS

(News report from Issue No. 207, published on Nov. 5 2014)

Tajik economy sliding, says WB

OCT. 27 2014 (The Conway Bulletin) – Tajikistan’s GDP has fallen by 0.8% this year compared to 2014, the World Bank said, more evidence that economies closely-linked to Russia are suffering from sanctions imposed by the West.

The World Bank said that a fall in remittances from Tajik workers in Russia had translated into weaker domestic demand for goods.

“A Russian slowdown affects Tajikistan largely through the remittances channel,” the World Bank wrote in its report.

“A slackening in remittances weighs heavily on household demand, notably demand for services and housing construction.”

This is particularly worrying for Western countries which are counting on a strong and stable Tajikistan to act as a bulwark against any movement by the Taliban northwards into Central Asia from Afghanistan.

Most of the former Soviet Union has been hit by Western sanctions imposed on Russia because of its alleged intervention in the Ukraine civil war but the World Bank also said that a generally weak global demand for industrial goods was impacting Tajikistan too.

It said that industrial growth had fallen to 3% from 7% a year earlier because of low global industrial demand and falling cotton and aluminium prices.

These sentiments mirror the Tajik Central Bank. Both also predicted that inflation would gradually become an increased concern in Tajikistan.

ENDS

(News report from Issue No. 206, published on Oct. 29 2014)

Inflation to rise in Kyrgyzstan

OCT. 27 2014 (The Conway Bulletin) – Kyrgyz president Almazbek Atambayev has said inflation will increase in Kyrgyzstan when it joins the Customs Union, which is morphing into the Eurasian Economic Union next year. He also said the country no alternative to joining the Russia-led economic bloc, highlighting the Kremlin’s tightened grip over Kyrgyzstan.

ENDS

(News report from Issue No. 206, published on Oct. 29 2014)

House price bubbles in Kazakhstan

OCT. 28 2014 (The Conway Bulletin) – Houses prices in Kazakhstan rose by nearly 10% last year, media quoted the IMF as saying, one of the biggest rises in the world. The spike was far higher in Almaty. Economists have warned of a bubble in Kazakhstan’s housing market.

ENDS

(News report from Issue No. 206, published on Oct. 29 2014)

Kazakh tenge to drop in value

OCT. 17 2014 (The Conway Bulletin) – With the rouble under increased pressure it has become likely, analysts have said, that the Kazakh government will devalue its currency for the second time this year.

Halyk Bank placed the tenge on a negative watch. The report, no longer available on the website of Halyk’s Financial Department, said the tenge would be around 210/$1 by the end of the year compared to 183/$1 currently. That’s a drop of around 10%.

“In the last three days conditions in Tenge-denominated money markets deteriorated sharply,” Halyk Bank wrote.

“Such changes usually happen before devaluations: demonetization, declining demand for Tenge- denominated assets, the rising cost of holding Tenge mirrored by the rising costs of borrowing, all illustrating a loss of confidence and the deepening of the currency crisis.”

Sabit Khakimzhanov, head of research at Halyk Bank and author of the report, attributed the weakening of the tenge to rising interest rates, rouble trouble, and oil prices below $95 per barrel.

The note will have irritated the Kazakh Central Bank which has been denying that it is planning a second devaluation of its currency. Khakimzhanov said that, unusually, an unnamed party had been buying $200m worth of tenge every day. This, analysts suspected, was the Central Bank trying to shore up its currency.

And, rather mysteriously, a few days after it was put up on its website, the currency note disappeared. Analysts at Halyk Bank told the Conway Bulletin that it was a management decision to take down its report.

Earlier this year, the government devalued the tenge overnight by 20%.

ENDS

(News report from Issue No. 205, published on Oct. 22 2014)

Azerbaijan increases defence budget

OCT. 13 2014 (The Conway Bulletin) – Azerbaijan will increase its defence spending next year by just over 3%, keeping up with inflation, IHS Janes Defence reported quoting the Azerbaijani finance ministry. Azerbaijan has been increasing its defence spending through the last few years.

ENDS

(News report from Issue No. 204, published on Oct. 15 2014)