Tag Archives: currency

Uzbekistan lifts decades-long currency controls

TASHKENT, SEPT. 5 2017 (The Conway Bulletin) — Uzbekistan released its soum currency from decade-long controls that have artificially bolstered its strength and allowed a Black Market to flourish.
Officially, the soum dropped by nearly 50% to trade at around 8,000/$1, roughly the Black Market level prior to the announcement that currency controls were to be lifted.
President Shavkat Mirziyoyev, in power since September last year, wants to increase civil liberties and he saw the dual currency rates as holding back investment. The currency controls effectively made investing in Uzbekistan twice as expensive for foreign companies as it should have been.
A Conway Bulletin correspondent in Tashkent said that hundreds of ordinary Uzbeks queued to exchange Uzbek soum into US dollars at banks and official exchange points rather than through Black Market dealers in the city’s bazaars.
While most people were happy that the currency controls had been lifted, others were more cautious. One of the main gripes was that the government would only allow the exchanges to go through on special bank cards, rather than through cash.
“Currency can only be bought on a conversion card, not cash? I mean you sell your dollars to the bank in cash, but you can buy it only on the card?” one man queuing at a bank said.
“The question is – what’s the use of it? After all, with the same success, I can buy currency on the Black Market and go abroad and spend it there with the same success. When will they start selling foreign currency in cash?”
Others were more upbeat.
“It is clear that the first stage of the reform will begin to work now. And I hope after some time we will be allowed to buy dollars in cash,” another man said.
Nearby, though, the impact of scrapping the currency controls was being felt in other ways. In an area of Tashkent’s biggest bazaar usually crowded with money changers, only policemen stood idly. The currency Black Market, so long a feature of Uzbek life, has been, at least temporarily, put out of business. Some people, though, ruefully said that it could rebound.
“The Black Market will eventually come back if cash cannot be bought in banks,” one woman said.
ENDS

Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 342, published on Sept. 7 2017

CURRENCY MARKETS: Uzbek soum collapses after pegs are cut

SEPT. 7 2017 (The Conway Bulletin) — It’s all eyes on the Uzbek soum after the Central Bank said last week that it would converge the dual currency exchange rate system that has been operating since the collapse of the Soviet Union in 1991. Under that system, the Black Market rate of the soum was roughly half the official rate.

And so it proved. As soon as controls over the official rate were scrapped, it fell by 48% to 8,100/$1. The unofficial rate, as measured by the uzdollar.com, remained pretty much steady at around 7,700/$1.

In reality, the economic shock of ditching support for an official exchange rate will be limited. Currency controls previously meant that the Black Market rate had been widely used. Uzbeks were used to a rate of around 7,700/$1 to 8,800/1.

ENDS

Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 342, published on Sept. 7 2017)

 

Uzbek soum fluctuates heavily

AUG. 19 2017 (The Bulletin) — Uzbekistan soum currency has been volatile since last week when Reuters reported that President Shavkat Mirziyoyev and the Central Bank wanted to reform exchange rates. Uzbekistan currently has two operational exchange rates — an official one and an unofficial one. The Black Market rate rose to around 7,300/$1 by Aug. 14, from around 8,400/$1 at the start of the month. It had lost ground by the end of the week, though, and finished at around 8,100/$1.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 340, published on Aug. 20 2017)

 

Uzbek CB introduces new bank note

AUG. 14 2017 (The Bulletin) — Reflecting sharp inflationary pressures, the Uzbek Central Bank said that it was going to introduce a 50,000 soum banknote. In June, in a rare statement, the Central Bank said that rising inflation had forced it to increase its key interest rate to 14% from 9%. Earlier this year it introduced a 10,000 soum note. The 50,000 soum note is equivalent to $12 on the official exchange market and around $6 on the unofficial market.

ENDS

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(News report from Issue No. 340, published on Aug. 20 2017)

 

Kazakh CB blames rouble for tenge fall

AUG. 2 2017 (The Bulletin) — Kazakhstan’s Central Bank said that speculation over the Russian rouble had forced a depreciation of the tenge. By the end of trading on Aug. 4, the tenge was trading at 332.91/$1, down from around 310/$1 at the end of May. Kazakhs have openly started to worry about a repeat of the devaluation of 2015 that wiped 50% off the value of the currency.

ENDS

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(News report from Issue No. 336, published on Aug. 5 2017)

 

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.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

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

 

Currencies: Kazakhstan’s tenge

JULY 16 2017 (The Bulletin) — The Kazakh tenge has now fallen to its lowest level since January, giving up most gains it had made this year.

By July 14 it was trading at $327.91/$1, down 2.3% since July 3. At its year peak on May 25, the tenge had traded at 310.65/$1. This means that it has fallen by 5.5% in around seven weeks.

A fluctuating oil price is likely to have had little impact on the value of the tenge. It has been hovering between $50 and $45 per barrel for some time. Instead, commentators have pointed to weak Kazakh fundamentals which suggest that the economy is still in poor shape.

Most worryingly amongst this economic data is the bad debt ratio that banks have built up. It just seems to be getting bigger and the government is preparing a bailout.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

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

 

Uzbekistan allows currency liberalisation

JULY 7 2017 (The Bulletin) — Uzbekistan has allowed a handful of banks to trade its soum currency at its market rate, Reuters quoted two officials as saying, part of a plan promoted since the death last year of Islam Karimov to liberalise its currency. Currently, investors have to buy soum at an official rate of around 4,000/$1 compared to an unofficial rate of around 8,500/$1. Foreign investors have said that Uzbekistan’s dual currency scheme is a major drawback for its investment climate.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

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

 

Currencies: Kyrgyzstan’s som

JULY 3 2017 (The Bulletin) — The Kyrgyz Central Bank said that the economy was picking up, electing to keep interest rates steady, but Kyrgyzstan’s som currency has continued to fall. It is now trading at around 69.2/$1, its lowest since March. If its drops through the 69.4/$1 barrier it will hit its lowest value since September.

The turnaround in the currency has been startling and highlights just how vulnerable the currencies of Central Asia are to the whims of their governments. Analysts said that the recent drop in the value of the Kyrgyz som from 67.2/$1, its highest level since mid-2015, has been controlled and bears the hallmarks of a managed decline.

Analysts have warned that inflationary pressures have been built into the Kyrgyz economy. A decline in the value of a national currency is one way that inflation seeps out. The Central Bank said that inflation was now around 4.4%, a large jump from the end of last year when it was measuring deflation.

GDP growth for the first five months of the year was over 6%, outpacing expectations.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 335, published on July 3 2017)

 

Turkmen economy is ailing

JUNE 21 2017 (The Bulletin) — Turkmenistan’s economy is stalling and its prospects looking increasingly bad, Radio Free Europe/Radio Liberty reported in a podcast.

Pulling accurate information from Turkmenistan is complicated with most analysts describing GDP growth data permanently showing a 6% expansion as both unrealistic and misleading. Instead they are increasingly following revenue export data which measured $5b last year against $9b in 2014. This gives a rough indication of how much money the Turkmen government, driver of the economy, has to spend.

Energy prices collapsed in 2014, hitting the Turkmen economy particularly hard as it is reliant on gas sales to China.

The US-funded RFE/RL said that the an informal barter economy had grown as cash was in such short supply.

“I would call this a great Turkmen Depression,” said Farrukh Yussupov, head of the RFE/RL Turkmen service. “People are not getting paid for months and at the bazaars not only do you see fewer buyers but today we are reporting that there are no sellers either.”

RFE/RL also said that President Kurbanguly Berdymukhamedov had ordered regional governments to meet their own expenses as central government couldn’t afford to prop them up.

The official rate of the Turkmen manat is 3.5/$1 but sources on the RFE/RL report in Ashgabat said that on the Black Market the manat is trading at around 7/$1.

Earlier this year, Mr Berdymukhamedov ordered his government to cut generous Soviet- era subsidies as a way of saving money, a certain sign that the economy was in trouble.

ENDS

Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved

(News report from Issue No. 334, published on June 26 2017)