Tag Archives: Uzbekistan

Currencies: Uzbekistan’s soum

JULY 27 2017 (The Bulletin) — So, it looks like we already have the big currency story of the year for the region. At least, that is, unless something goes terribly wrong with some of the more wobbly currencies out there – mentioning no names – Azerbaijan, Turkmenistan and even Kazakhstan.

The IMF returned from a mission to Tashkent saying that the government there was fully intending to relax currency exchange regulations that have strangled foreign investment. The official rate of the Uzbek soum is now just over 4,000/$1. The unofficial rate is more than double. How they merge is going to be the story to watch.

In the meantime, if anybody has missed it, it is clear that the Uzbek Central Bank has been managing a steady devaluation of its currency. The chart below shows the steps it has been making to devalue it – by more than 25% since the end of January.

On the equities front, KAZ Minerals continues to outperform, mainly because of another surge in copper prices.

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(News report from Issue No. 337, published on July 27 2017)

Uzbekistan’s and Germany’s Siemens signs MoU

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JULY 24 2017 (The Bulletin) — Uzbekistan and Germany’s Siemens signed a memorandum of understanding to boost cooperation in the railway sector. The specifics of the deal were thin but it is being seen as a step towards more projects for Siemens in Uzbekistan.

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(News report from Issue No. 337, published on July 27 2017)

Uzbekistan promises to reform its currency exchange

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TASHKENT, JULY 24 2017 (The Bulletin) — Uzbekistan plans to power ahead with reform of its currency exchange, the IMF said after a mission to Tashkent.

The Uzbek Central Bank has steadily cut the value of its soum currency, allowing it to devalue by around 25% this year, but there are still restrictions on trading it. Tearing up these restrictions would underscore the credentials of Shavkat Mirziyoyev, president since September last year, as a reforming leader.

In a statement, the IMF said: “The mission especially welcomed the authorities’ plan to frontload reforms of the foreign exchange system. Unifying exchange rates and allowing a market-based allocation of foreign exchange resources would allow the Central Bank of Uzbekistan to pivot to a stability-oriented monetary policy capable of effectively controlling inflation.”

The reference to inflation is important as the Uzbek Central Bank said earlier this year that it was having to raise its key interest rate to combat rising prices. Like the rest of the region, a collapse in oil prices and a recession in Russia have hit the economy of Uzbekistan.

Operating in Uzbekistan has always been problematic for foreign investors. There are two different exchange rates in the country. The official one set by the Central Bank, and the unofficial Black Market rate. A Bulletin correspondent said the Black Market rate for the Uzbek soum was 8,450/$1, compared to just over 4,000/$1 on the official market.

The IMF also said restructuring state-owned companies and banks and improving economic data were vital.

“The authorities’ decision to adopt a new CPI to measure inflation, starting in 2018, should already help improve the quality of a key statistical indicator,” the IMF said.

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(News report from Issue No. 337, published on July 27 2017)

Telia writes down Ucell, Uzbek subsidiary

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JULY 14 2017 (The Bulletin) — Telia, the Swedish-Finnish telecoms company, said that it had written off the value of Ucell, its Uzbek subsidiary, by 2b Swedish krona ($245m) to 1.3b krona ($160m) because of currency and regulatory risks. It wants to sell out of Central Asia after a corruption row focused on its Uzbekistan unit. Earlier this year it sold its majority stake in Tajikistan’s Tcell to the Aga Khan. It appears to be having more difficulty offloading Ucell and its majority stakes in Kazakhstan’s Kcell, Azerbaijan’s Azercell and Georgia’s Geocell.

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(News report from Issue No. 337, published on July 27 2017)

Uzbek officials consider easing cafe curfew

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TASHKENT, JULY 20 2017 (The Bulletin) — Uzbek officials said they would consider softening restrictions on cafe and restaurant opening times, a curfew blamed for stunting the development of Uzbekistan’s nightlife.

Although officials didn’t give any details, cafe owners and staff welcomed the news as another step towards opening up Uzbekistan since the death last year of President Islam Karimov. A waitress who works at a small summer cafe in Tashkent told a Bulletin correspondent that she currently closes the cafe when it is still full of customers.

“We have to close at a very time when we have a good flow of clients,” she said.

Local bars and restaurants in Tashkent are, officially at least, only allowed to open until 11pm, cutting the evenings short. In neighbouring Kazakhstan and Kyrgyzstan, restaurants and cafes stay open late.

Not that the rules are applied evenly, an employee at another Tashkent restaurant explained.

“If you have money and powerful contacts you can freely serve the clients at any time of the day. All you have to do is to please the police and other officials,” he said.

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(News report from Issue No. 337, published on July 27 2017)

EU promises to help Uzbekistan

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JULY 18 2017 (The Bulletin) — At their first high-level meeting with Uzbek officials since the death of Islam Karimov in September, EU officials praised the reform path that the country has taken over the past 10 months and promised to help reform Uzbekistan’s agricultural sector with a 21.5m euro grant to water research institutes. Karimov was considered an autocrat who refused to relax his grip on both power and the lives of ordinary people. Since his death, Uzbekistan has reformed various laws and increased personal freedoms.

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(News report from Issue No. 337, published on July 27 2017)

24-hour news channel starts in Uzbekistan

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JULY 24 2017 (The Bulletin) — A new state-run 24-hour news channel started broadcasting reports in Uzbek, Russian and English in Uzbekistan. Supporters of the new station have heralded it as yet another move by President Shavkat Mirziyoyev to open up the country but his detractors have said that through the 24-hour news channel he is trying to set and control the agenda.

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(News report from Issue No. 337, published on July 27 2017)

Uzbekistan to reform tax collection system

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JULY 19 2017 (The Bulletin) — The authorities in Uzbekistan have said that they intend to reform the country’s tax system in line with a swathe of liberalisations across the country. It is unclear what officials meant by this but media reported that the government wanted to increase the amount of tax collected and cut down on corruption.

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(News report from Issue No. 337, published on July 27 2017)

IRFC head visits Uzbekistan for first time since 1925

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JULY 3 2017 (The Bulletin) — After visits to Uzbekistan and Kazakhstan, Tadateru Konoe, President of the International Federation of Red Cross and Red Crescent Societies (IFRC), said that both countries had inspired him and given him “a great deal of hope” because of the way that different ethnic groups worked together. Mr Konoe was the first head of the IFRC to visit Uzbekistan since 1925 when the Red Crescent Society of Uzbekistan was set up.IRF

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(News report from Issue No. 336, published on July 16 2017)

Comment: Turkey’s coup and its impact

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ISTANBUL, JULY 16 2017 (The Bulletin) — Finally we’ve made it to this finest of cities. It’s taken us a week since leaving Edinburgh to get here – via Yorkshire, Hampshire, Lord’s cricket ground, Warsaw, Prague (the airport only) and lovely, louche Odessa.

But at turns brooding and majestic; playful and frustrating, Istanbul is a place that commands love and loyalty. My wife and I are heading east on book research duty, hers not mine, and there was no reason to linger. Still, I insisted. It’s good for the temper, if not the waistline, to spend days here eating, drinking and strolling.

Coincidentally we are in Istanbul for the first anniversary of a failed coup attempt against Turkish President Recep Erdogan. A rebel army unit captured the bridge over the Bosphorus and tried to arrest Erdogan. They failed and the ramifications have been great.

Erdogan blamed the exiled cleric Fethullah Gulen for organising the coup and police have arrested at least 50,000 people for being ‘Gulenists’. This purge hasn’t been confined to Turkey. Pressure has been applied to Turkey’s allies in Central Asia and the South Caucasus too. Azerbaijan and Turkmenistan have been happy to comply, others less so, although Georgia has started to acquiesce.

With a resurgent Russia and a powerful China, Turkey’s influence in the region has waned since the 1990s but the coup anniversary is a reminder that events in Istanbul reverberate across the Anatolian plateau, over the Caspian Sea and on to the Tien Shan mountains.

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(News report from Issue No. 336, published on July 16 2017)