JULY 17 2015 (The Conway Bulletin) – Georgia’s parliament passed a final reading of a bill that strips supervision of the country’s commercial banking sector from the Central Bank. The World Bank had urged the government to drop the bill. President Giorgi Margvelashvili now has to sign the bill into law although he has said he may veto it.
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(News report from Issue No. 241, published on July 23 2015)
Kazakhstan’s Central Bank chief Kairat Kelimbetov extended the bandwidth that the tenge could trade against the US dollar to 182-198 from 182-188, effectively giving it room to devalue by over 5%.
Hours after Mr Kelimbetov’s statement, exchange bureaus in Kazakhstan had already upped the price of $1 to over 188 tenge, breaking the psychological 187 value it had been pegged around for so long.
A drop in the value of the Russian rouble and the price of oil has pressured the tenge. The Kazakh Central Bank has stood firm, though, and defended the value of its currency while neighbours have devalued.
Still, Mr Kelimbetov said external pressures had triggered the bandwidth extension and that the move was designed to shift the tenge towards a full free-float over the next 12 months.
“This corridor allows the currency to fluctuate independently of the negative scenarios that may take shape outside Kazakhstan,” he said.
Mr Kelimbetov, though, said he didn’t see the tenge dropping below 192 against the dollar in the next 6 months.
The government has said that it wants its monetary policy to target inflation rather than a tenge-US dollar rate.
This bandwidth extension follows on from a gentle recalibration of the tenge. The Central Bank has allowed it to lose a couple of percentage points in value against the US dollar this year. In February 2014, the Kazakh Central Bank devalued overnight by 20%.
JULY 10 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank cut its key interest rate by 50 basis points to 3% to give its non-oil sector a boost.
Like other countries in the region, Azerbaijan has been trying to cope with an economic downturn triggered by a fall in Russia’s economy and a drop in the price of oil.
The Central Bank said Azerbaijan’s economy had stabilised since it devalued its manat currency by a third in February.
“The Azerbaijani economy remains resilient amid recent processes in the global economy and in the region continuing its stable growth,” the Azerbaijani Central Bank said in a statement.
“The monetary policy can be further eased given the acceptable level of inflation and dynamics of money supply.”
The cut in interest rates, though, is likely to put more pressure on the manat currency. This was momentarily relieved by the devaluation. Since then, data from the Central Bank has shown it has continued to spend heavily propping up its currency, although there was a rebound over the past few months which may have prompted the interest rate cut. Azerbaijan’s foreign currency reserves now measure $8.5b compared to 13.7b at the end of 2014.
Azerbaijan’s economy is skewed towards oil and gas.
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(News report from Issue No. 240, published on July 16 2015)
JULY 16 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank chief Elman Rustamov told local media that he expected the manat currency to remain stable if oil prices steadied at around $50/barrel. The Central Bank devalued the manat by a third in February.
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(News report from Issue No. 240, published on July 16 2015)
JULY 15 2015 (The Conway Bulletin) – Elman Rustamov, the Azerbaijani Central Bank chief, said that at current oil prices, Azerbaijan’s economy will continue to grow. Mr Rustamov may have been trying to reassure a jittery public. Azerbaijan’s economy has been coping with the fallout of a drop in oil prices and a downturn in Russian economic prospects.
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(News report from Issue No. 240, published on July 16 2015)
JULY 8 2015 (The Conway Bulletin) – Kazakhstan’s foreign currency reserves declined by 4.4% in the first half of 2015, data from the Central Bank showed. Kazakhstan, like other countries across the region, has been defending the value of its currency by spending its reserves.
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(News report from Issue No. 239, published on July 9 2015)
TBILISI, JULY 7 2015 (The Conway Bulletin) — Georgia’s Central Bank scorned as inadequate the government’s plan to cut spending in the face of a region-wide economic downturn.
The statement will increase tension between the Central Bank and the Georgian Dream Coalition government which have become embroiled in a row about oversight of commercial banks.
Central Bank chief Giorgi Kadagidze, who was appointed by the former government of President Mikheil Saakaashvili, and his allies have said the government’s criticism of him is politically motivated.
“Expenditures should be cut mostly at the expense of current spending,” the Central Bank said in a statement. “If the goal of the Parliament is to ease the loan burden caused by lari depreciation or to offset further downward pressure on lari, appropriate changes should be made in the [budget], which are not envisaged by the proposed draft of the budgetary amendments.” This is rare criticism.
Last month MPs voted to cut spending across different ministries. The lari has lost just over a quarter of its value since November 2014.
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(News report from Issue No. 239, published on July 9 2015)
JULY 1 2015 (The Conway Bulletin) – Georgia’s Central Bank raised its interest rate to 5.5%, its highest since Nov. 2012, to combat accelerating inflation. Georgia’s Lari currency has fallen sharply in value over the past few months, mainly because of the downturn in Russia’s economy.
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(News report from Issue No. 238, published on July 2 2015)
JULY 1 2015 (The Conway Bulletin) – Tajikistan’s Central Bank is cutting nearly 200 jobs as it restructures and streamlines its operations, media reported. It’s unclear exactly what the restructuring entails but media said that most jobs would be lost at the Central Bank’s offices in Dushanbe.
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(News report from Issue No. 238, published on July 2 2015)
JULY 1 2015 (The Conway Bulletin) – Commercial banks in Kyrgyzstan’s need to meet a minimum capitalisation level, the Central Bank said, part of an ongoing process to professionalise the banking sector and protect it against another Global Financial Crisis. By 2017, commercial banks in Kyrgyzstan will need a working capital of nearly $10m.
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(News report from Issue No. 238, published on July 2 2015)
