JAN. 22 2016 (The Conway Bulletin) – The Georgian currency, the lari, hit an all-time low of 2.47/$1, despite various interventions by the Central Bank to prop it up. Its previous low had been set in 1999, providing context for just how much value currencies in the South Caucasus and Central Asia have lost. The lari is down around 25% from a year earlier.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 25 2016 (The Conway Bulletin) – Turkmenistan’s President Kurbanguly Berdymukhamedov said he wants the government to keep a stricter control on the currency market, hinting that the country might soon revise its monetary policy. Mr Berdymukhamedov has also voiced his dissatisfaction of a number of government officials in the past few weeks, a sign of a possible government reshuffle.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 26 2016 (The Conway Bulletin) – Currency exchange booths in Almaty refused to change US dollars after the price of oil started to rise slightly, highlighting the fears and weaknesses of the Kazakh economy. Like the rest of the region, Kazakhstan’s currency has slumped with the decline in oil price. Unlike some of its neighbours, Kazakhstan hasn’t imposed heavy currency controls.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 21 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank increased interest rates on tenge held bank deposits by four percentage points to 14% in an attempt to defend the value of its currency. The Central Bank has maintained different interest rates on tenge and US dollar deposits for several years. US dollar deposits now earn interest of 2%, down from 3%.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Inflation in Kazakhstan in 2015 measured 13.6%, nearly double the rate of 2014, media reported quoting the state statistics agency. The final tally confirms that prices increased rapidly after a tenge devaluation in August. The tenge has lost around 55% of its value since Feb. 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 19 2016 (The Conway Bulletin) – Azerbaijan imposed some of the most stringent currency controls in the region to try and halt the slide in its manat currency and to stop a feared wave of capital outflows as the economic storm that has hit the region strengthens.
The most draconian measure was an immediate 20% tax on purchases of property, securities and other investments in foreign currencies.
“People should know that the central bank, other government agencies are in a position to prevent the manat from falling sharply,” Azerbaijan’s Central Bank chief, Elman Rustamov, said in televised comments clearly aimed at shoring up public support. Last week sporadic clashes broke out in regional towns between angry protesters and police.
The Azerbaijani manat has lost 50% of its value in six months and people have lost confidence in the country’s financial system.
Mr Rustamov also said that the Central Bank held enough currency reserves to support the manat, despite a series of reports which suggested that it was running out of money after trying to defend its value unsuccessfully throughout 2015, and that several smaller banks would soon have to merge.
Other measures unveiled by Mr Rustamov to try to boost public support in the manat included allowing people to pay back loans of up to $5,000 at the manat/$ exchange rate prior to the last devaluation on Dec. 21 and cancelling tax on manat bank deposits and dividends.
Azerbaijan has been one of the hardest hit by the economic slowdown that has hit the region. Its economy is dependent on oil which has sunk in price to around $28/barrel from around $115/barrel in July 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
ALMATY, JAN. 18 2016, (The Conway Bulletin) — Kazakhstan’s national airline Air Astana reported a 21% drop in revenues in 2015, a sign that the economic downturn is hurting state- owned companies.
Air Astana was not explicit about exactly what triggered the sharp drop in revenue. In a press release, Air Astana CEO Peter Foster said: “A sharp fall in revenue was more than compensated for by significant cost savings, including, though not limited to, jet fuel savings.”
Revenue in 2015 dropped to $738m. Net profit rose to $47.4m from $19.5m.
An Air Astana spokesperson told The Bulletin that more explanation on why revenues had fallen so sharply would be given in a full year report to be published over the next few weeks.
The suspicion is that the depreciation of the tenge has hit Air Astana hard. Its income is mainly in tenge and its costs in US dollars or euros. The tenge has lost 50% of its value over the past five months.
Air Astana is supposed to lease 7 aircraft from Netherlands-based AerCap, a deal priced in euros. The fall in the tenge makes the deal expensive.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 19 2016 (The Conway Bulletin) — Ratings agency Fitch downgraded Kazkommertsbank’s long-term credit to CCC from B- because of a fall in the value of the tenge. Fitch said: “The downgrade reflects a significant increase in the volume of problem (mostly foreign currency-denominated) exposures, primarily as a result of the tenge’s devaluation.”
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 12 2016, ALMATY (The Conway Bulletin) — Data from the Kazakh Central Bank showed that Foreign Direct Investment (FDI) into the country has collapsed to its lowest level for a decade.
In the first nine months of 2015, FDI into Kazakhstan measured $2.1b. Total FDI in 2014 was $8.3 and in 2010 was 10.4b.
The new data is yet more evidence of the sharp slowdown in the Kazakh economy, as well as the impact of the 50% fall in the value of the tenge.
Economists have forecast a slowdown in economic growth in Kazakhstan, expected to last into 2017 and 2018, linked to low oil prices and a recession in Russia.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 15 2016 (The Conway Bulletin) — In Azerbaijan, people took to the streets to protest against inflation and unemployment. The manat grew slightly to 1.58/$1, but what angers people most is the increase in prices, especially for imported goods.
In Kazakhstan, the tenge depreciated further to 366/$1, a 6% drop on the previous week. Many worry now that there could be no end to the downward spiral.
In Tajikistan, the somoni lost an additional 2% this week, trading at 7.38/$1. The currency slide in the country doesn’t seem to slow.
In Kyrgyzstan the Central Bank has kept the som stable at 75.9/$1 by intervening several times in the currency market. The Georgian Central Bank also protected the lari with a few interventions. In Azerbaijan and Turkmenistan, the governments imposed further restrictions on the trade of foreign currencies, by limiting licenses to banks, airports and, in Azerbaijan’s case, hotels.
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(News report from Issue No. 263, published on Jan. 15 2016)
