OCT. 7 2015 (The Conway Bulletin) – The Kazakh Central Bank will probably delay its high-profile move to Astana from Almaty because of the worsening financial crisis, Central Bank chief Kariat Kelimbetov said. The Central Bank is the last remaining major government institution based in Almaty. It was slated to move to Astana by 2017.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 251, published on Oct. 9 2015)
ALMATY, OCT. 2 2015 (The Conway Bulletin) — Kazakhstan’s Central Bank raised its new key interest rate to 16% from 12% in an attempt to contain rising inflation.
The increase in the overnight repo rate, made the key interest rate in September, highlights how heavily the Central Bank underestimated the rate that inflation would rise after a devaluation of its tenge currency in August. The tenge is now trading at 272/$1 compared to 188/$1 before it was cut from its US dollar peg on Aug, 20.
“Considering the economic data and prospects for growth the National Bank decided to raise its key interest rate to 16% to keep inflation in the medium-term target range of 6-8%,” the Central Bank said in a statement.
But bolstering the strength of the tenge may have been the Kazakh Central Bank’s main objective for the interest rate rise. Despite promising not to intervene in the currency markets after ditching the US dollar peg, the Kazakh Central Bank has spent $1b propping up its currency and keeping it away from the 300/$1 floor that it has threatened to fall through.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 250, published on Oct. 2 2015)
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
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
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
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 21 2015 (The Conway Bulletin) – Georgia’s Central Bank said it bought $27m worth of lari to strengthen its currency. This is the 6th intervention by the Central Bank this year to prop up its currency which has lost around 37% since September 2014. It said earlier this year that it wouldn’t prop up its currency.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 23 2015, ALMATY (The Conway Bulletin) — The Kazakh Central Bank presented a bill to parliament that will force people to take loans in tenge, a tactic it says is necessary to wean the economy off its addiction to US dollars.
Shaken by a 40% drop in the value of the tenge over the past 18 months, the Central Bank wants to ensure that commercial banks do not accrue a large amount of bad loans in US dollars as they did during the 2008/9 Global Financial crisis.
“This is an effort to protect customer’s rights and to decrease the rate of non-performing loans for second-tier banks,” Kuat Kozhakhmetov, deputy chairman of the Central Bank, said when he presented the bill to the parliament.
If the bill becomes law, people who have not earned their salary in a foreign currency for the 6 months before asking for a loan will will only be able to apply for a tenge loan.
According to a recent IMF study, almost 60% of the total loans issued by financial institutions in Kazakhstan are denominated in a foreign currency. The Central Bank also said that 14% of mortgages are currently denominated in foreign currencies.
People in Kazakhstan have used foreign currency loans to buy goods indexed to the US dollar or the Russian rouble, such as houses or cars. Salaries are often paid in tenge but are indexed to the US dollar.
A fall it the value of oil and a slump in the Russian economy has pressured the tenge and other regional currencies. Loans taken out in US dollars have become much more expensive to service.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 25 2015 (The Conway Bulletin) – The Georgian Central Bank is one of the more open central banks in the region. It holds scheduled meeting and posts reasonably detailed explanations on its monetary policy decisions.
In short it can give people interested in Central Asia and the South Caucasus something of an insider’s view of things. This makes its statement on Sept. 23 that accompanied an interest rate rise all the more important.
And the Georgian Central Bank was blunt in its assessment of the problems facing the wider region.
“Real GDP growth in the second quarter was consistent with the forecasts,” it said. “The factor hindering growth is the external sector, which, given the dire economic situation in the region negatively affects export of goods and services.”
Of course the Georgian Central Bank was talking about poor GDP growth in Georgia but the more important word in this statement for the wider region was “dire”. The Georgian Central Bank had said what other government economists from Tajikistan to Kazakhstan to Azerbaijan and Armenia have been thinking but shying away from saying. The prospects for their economies, with inflation rising and the values of their currencies falling, is dire.
Of course there are differences between the various regional economies – Kazakhstan and Azerbaijan are heavily dependent on oil and gas sales, for example, while Georgia isn’t – but many of the pressures are shared ones and if one Central Bank, in this case the Georgian one, starts describing the situation as “dire” it is important to listen.
By James Kilner, Editor, The Conway Bulletin
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 22 2015, TBILISI (The Conway Bulletin) — Pushing their personal differences aside, Georgia’s Central Bank chief Giorgi Kadagidze and the PM Irakli Garibashvili held a rare head-to-head meeting to discuss the increasingly poor state of the Georgian economy.
A collapse in global energy prices and a sharp fall in the performance of Russia have pressured regional economies this year but a breakdown in relations between the Central Bank and the PM’s office has also been a feature of the year in Georgia.
The Central Bank’s press office declined to confirm if this was the first time Mr Garibashvili, the PM, had visited Mr Kadagidze in 2015 but analysts said it was a rare occasion.
“It was significant, as they discussed the currency,” said Tamar Jugheli, research director at the Policy and Management Consulting Research Center. She said a management change in one of the main departments at the Central Bank had improved relations. Mr Garibashvili has criticised Mr Kadagidze over monetary policy. He also stripped the Central Bank of its power to oversee commercial banks.
Like many issues in Georgia, politics is at the heart. Mr Kadagidze was appointed by the previous government of former president Mikheil Saakashvili, irritating the current government.
Still with Georgia’s currency dropping to an all-time low and with inflation rising fast, Mr Kadagidze and Mr Garibashvili had to act. After the meeting the Bank bought $40m worth of lari and then, the following day, it increased interest rates.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 15 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank intervened in the money markets to stop the tenge from dropping below 270/$1. Kairat Kelimbetov, the Central Bank chief, had told the FT earlier in the week that the Bank would not intervene again after it ditched a peg to the US dollar last month. The tenge is now trading around 266/$1.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
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
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
