SEPT. 2 2015 (The Conway Bulletin) – Chinese Zijin Mining Group Company pledged more investment into Tajikistan’s gold mines, local media reported. Zijin owns a 75% stake in a joint venture with the Tajik government in the development of the Zarafshan gold mine, the largest gold mine in Tajikistan.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 2 2015 (The Conway Bulletin) – Around 100 protesters scuffled with police in Yerevan over electricity price rises for businesses. Activists said they believe President Serzh Sargsyan has reneged on his promise to protesters in June to subsidise planned electricity price rises by omitting businesses from the deal.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 4 2015 (The Conway Bulletin) – A court in Azerbaijan jailed journalist Khadija Ismayilova for various financial crimes. Her supporters have said that the charges were fabricated and that this is just another attempt by the authorities to silence one of their most fierce critics. Although the authorities in Azerbaijan have imprisoned dozens of human rights activists, opposition members and journalists, Ismayilova is the most high profile.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 2 2015 (The Conway Bulletin) – The Kyrgyz som lost 5.4% of its value on Sept. 1 falling to 66 som to $1, the biggest fall by any currency in Central Asia and the South Caucasus over the past week and the lowest value for the som against the US dollar for at least a decade.
This was also the som’s biggest one-day loss since March 2014. The Kyrgyz government, like the rest of Central Asia, has been battling to defend its currency against a sharp fall in the value of the Russian rouble, still the main driver of regional economic growth.
It’s unclear what pressured the Kyrgyz som to fall so severely but a few days earlier the head of the Central Bank Tolkunbek Abdygulov had said that the currency had dropped by 10.3% in 2015 despite the the government spending nearly $180m to protect its value.
“The National Bank will have enough reserves to avoid sharp fluctuations in the exchange rate of the som. Now the situation on the market is stable. There are no reasons for anxiety and panic,” media quoted Mr Abdygulov as saying on Aug. 25.
His statement and the subsequent fall in the value of the som suggest that the Kyrgyz Central Bank may be struggling to maintain its value.
Across the border in Kazakhstan, the Kazakh tenge has been stable at a level of 242/$1 during the past week, down from the a high of 252/$1 in August. The Kazakh Central Bank’s decision to adopt a new benchmark interest rate policy on Sept. 2, did not appear to have a significant impact on the exchange rate.
Elsewhere in Central Asia, the Tajik somoni and the Uzbek sum remained substantially unchanged. Currencies in the South Caucasus kept their against the US dollar throughout the week, fluctuating by just 1%.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 1 2015 (The Conway Bulletin) – At a meeting in Bishkek, Gazprom CEO Alexei Miller told Kyrgyz President Almazbek Atambayev the Russian gas monopoly wanted 60% of the country to have access to gas.
Gazprom bought the Kyrgyz gas network in 2013 but this is its first major plan for Kyrgyzstan’s pipeline system. Mr Miller said the plan would cost $700m and mean building 2,500km of new gas pipes.
“We are working ahead of our schedule with the government to get Kyrgyzstan ready for the winter,” Mr Miller said at the press conference. He also noted that construction work on the final section of the Tashkent Bishkek-Almaty gas pipeline had started.
The Tashkent–Bishkek-Almaty gas pipeline is touted as a key component of Central Asia’s energy nexus as it will double capacity being sent from Uzbekistan to populated areas in Kyrgyzstan and Kazakhstan.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 1 2015 (The Conway Bulletin) – Russia’s health department blocked the transit of 40 tonnes of dairy products from Latvia and Germany from travelling across its territory to Uzbekistan. Reports said the shipment had broken transit rules. European producers have dodged sanctions on Russia by sending products to Uzbekistan which they then send onto Moscow.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 3 2015 (The Conway Bulletin) – Georgia’s parliament voted to overrule a veto by President Giorgi Margvelashvili that would have blocked the adoption of a controversial bill that stripped the Central Bank of its supervisory powers over the commercial banking sector. International organisations have criticised the bill as politically-motivated. The Central Bank has argued with the government over economic policy.
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(News report from Issue No. 246, published on Sept. 4 2015)
SEPT. 4 2015 (The Conway Bulletin) – Timing is everything and fortune favoured me last month.
By chance, I flew into Almaty 24 hours after Kazakh President Nursultan Nazarbayev and Central Bank chief Kairat Kelimbetov had released the tenge from its US dollar peg.
This effectively triggered a 23% devaluation of the currency. I would be able to experience Ground Zero in the latest Emerging Markets currency crisis. If you’re a journalist, this is a good thing.
But if my timing had been fortunate, Mr Nazarbayev and Mr Kelimbetov hadn’t been so lucky. They had overseen an earlier devaluation of the tenge, let’s call this Devaluation 1, which hadn’t worked out. The current currency crisis, Devaluation 2, is a direct result of this mismanagement.
Without warning Mr Nazarbayev and Mr Kelimbetov had devalued the tenge by 20% in February 2014, hoping to make the Kazakh economy more competitive. The timing was poor, though, and within weeks Russia had become a pariah state in the eyes of the West because of its support for rebels in east Ukraine. Sanctions followed, denting Russia which is still the main economic driver in Central Asia. Within another six months oil prices collapsed and the Russian rouble went into free-fall.
The original Nazarbayev-Kelimbetov devaluation strategy, was undermined.
And this forced them into a corner. Defying economic logic and trying to rescue their own pride, they defended the new tenge-dollar peg despite neighbouring currencies sinking and oil prices flat-lining.
In the end, Mr Nazarbayev and Mr Kelimbetov bowed to the inevitable. The tenge is now around 39% cheaper than it was in January 2014.
On the streets of Almaty, ordinary Kazakhs generally greeted the devaluation with a shrug. There was also a palpable sense of relief. A second devaluation was always going to happen. The day after the devaluation, the run on the exchange kiosks was for tenge which signalled that most people thought it had bottomed out and wouldn’t devalue further.
And, crucially, it felt as if people had seen it all before.
We know what is going to happen next. The fallout from Devaluation 1 will guide us through the fallout from Devaluation 2. There will be price inflation, followed by salary rises. There will be job losses and the competitiveness generated by the devaluation will recede.
The major difference now is that the tenge currency is, theoretically at least, floating free.
By James Kilner, Editor, The Conway Bulletin
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(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 29 2015 (The Conway Bulletin) – The Asian Development Bank (ADB) approved a $20m loan to boost coastal defences along the Black Sea. The loan will be used to strengthen 5km of shore south of Batumi. The ADB said it was important to defend the shoreline to protect farmland and housing as well as the region’s beaches which attract thousands of tourists each year.
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(News report from Issue No. 246, published on Sept. 4 2015)
AUG. 30 2015 (The Conway Bulletin) – Speaking at a ceremony to mark 24 years of independence from the Soviet Union, Uzbek president Islam Karimov said that he wouldn’t allow a foreign military base to be established in Uzbekistan and that the country would always maintain its neutrality. Germany has a military base in southern Uzbekistan
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(News report from Issue No. 246, published on Sept. 4 2015)
