DEC. 2 2015 (The Conway Bulletin) – In an effort to prop up its manat currency, Azerbaijan’s Central Bank said it has spent nearly 60% of its currency reserves. Azerbaijan’s Central Bank held $6.8b at the end of October, down from $13.8b on Jan. 1. Azerbaijan devalued the manat by a third in February but this hasn’t stopped the slide.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 1 2015 (The Conway Bulletin) – Kazakhstan’s Central Bank issued its first 20,000 tenge note, depicting the Akorda presidential palace and a mock Arc de Triumphe in Astana and the Eli winged statue in Almaty’s central square.
When the idea of the blue, grey 20,000 tenge banknote was conceived in 2013, it would have been worth around $129.
Now, after two devaluations linked to the drop in oil prices and the fall of the Russian rouble, Kazakhstan’s 20,000 tenge is worth $65.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 4 2015 (The Conway Bulletin) — The Kyrgyz som continued its slump against the dollar and now trades at above 75.5/$1. The Central Bank chairman Tolkunbek Abdygulov said the exchange rate had changed because of a speculative attack and promised to continue to intervene to prop up the currency. The regulator said that local bank FinanceCredit was found guilty of speculative trading of the som. In addition, the Central Bank fined several exchange points across the country for speculating on currency rates.
In Tajikistan, the somoni was stable at 6.7/$1, after a rough week. On Nov. 30, media reported that Dushanbe residents had to pay around 7.5somoni for $1. The Central Bank reacted by drafting a decree that shut down the remaining private exchange bureaus in the country. Earlier in April, it had forced the closure of over 800 out of a total of 1,500 exchange bureaus because it said they were taking advantage of the unstable currency markets.
On Dec. 1, the Central Bank also reported the arrest of six employees of exchange bureaus for currency speculation. As with the Kyrgyz incidents, the details of these so-called speculative attacks have been difficult to pin down.
But none of this is surprising in Central Asia’s currency markets.
We witnessed a similar trend in Kazakhstan in 2014, when a devaluation of the tenge was followed by speculative attacks on the currency and interventions to keep the tenge from plummeting. This was repeated this year again in Kazakhstan.
It is likely that both Tajikistan and Kyrgyzstan will follow this trend and crack down on private exchange bureaus to strengthen their control over exchange rates.
In much of the rest of the region, currencies did not move. The exception was Uzbekistan. The Uzbek sum reached a new record trading low, officially, at 2,755/$1. In the last year, it lost almost 15% of its value.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 24 2015 (The Conway Bulletin) — The share of foreign currency-denominated deposits in Kazakhstan increased from 55.5% in January 2015 to 65.9% at the end of October, according to Central Bank chief Daniyar Akishev.
The devaluation of the tenge vis-à- vis the US dollar motivated people to keep their savings in US dollars to preserve the value.
One ofMr Akishev’s main tasks is to restore confidence in the tenge, after the currency lost 40% of its value over the summer. The 65.9% mark will beMr Akishev’s starting point, the ratio when he took office after his predecessor Kairat Kelimbetov was sacked on Nov. 2. New regulations restricting mortgage loans in foreign currencies might help reduce dollarisation, but a new wave of non-performing loans will soon hit the banking sector. A painful reminder of the 2008/9 financial crisis.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 24 2015 (The Conway Bulletin) – The Kyrgyz Central Bank is spending so much cash trying to defend its som currency that it is considering selling off its stock of diamonds.
Tolkunbek Abdygulov, the Central Bank chief, said that the bank had already sold large amounts of gold and that silver and diamonds were next.
“We started selling gold this year, next year are going to add silver bullion to this and have discussed the options of even selling diamonds,” he said according to media reports. Mr Abdygulov didn’t say whether Kyrgyzstan held substantial diamond reserves or not.
The Kyrgyz Central Bank has intervened 22 times this year in the currency market. This week it spent another $7m defending the som which at one point fell nearly 5% to an all-time low of around 79/$1. After the Central Bank intervention it rose back to around 74/$1.
The Central Bank’s reserves have fallen from $2.2b at the start of the year to about $1.7b now.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – Economic activity in Armenia increased by 3.5% in the first 10 months of the year compared to the same period in 2014, media reported by quoting the statistics agency. The statistics agency also said that salaries had increased by over 9% during the same period, a reflection of the drop in the value of Armenia’s dram currency.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 27 2015 (The Conway Bulletin) — The only currency that moved substantially this week was the Kyrgyz som, which lost 2.3%, closing at 74/$1 on Friday.
The Kyrgyz Central Bank intervened heavily this week to prop up its currency, which looked like it was losing traction and could have spiralled downwards. During the day on Nov. 26, the exchange rate had surged to 77-79 som/dollar, which prompted the Central Bank to sell $7m in the currency market and enabled the currency to recover somewhat and move back to 74/$1.
Tolkunbek Abdygulov, the Central Bank chief, said this week the exchange rate was influenced by speculators.
All other currencies were stable.
In the South Caucasus, the Georgian lari maintained its level of 2.40/$1 and the Armenian dram was also stable at 480.8/$1.
In Central Asia, the Kazakh tenge floated at around 307/$1 throughout
the week. The Tajik somoni continued its gentle depreciation, and now trades at 6.7/$1.
The dollaruz.com website which monitored the Black Market rate for the Uzbek sum, appears to have closed.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 17 2015 (The Conway Bulletin) — Halyk Bank, one of Kazakhstan’s largest retail banks, reported increased net income in the third quarter of 2015 of 36b tenge, roughly a third larger than the third quarter of 2014. In US dollar terms, taking into account the devaluation of the tenge, Q3 2015 and Q3 2014 are roughly the same. Operating expenses grew by 12.7% in the first 9 months of 2015 compared to the same period in 2014 because of wage inflation linked to the devaluation of the tenge.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 13 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank bought another $14m worth of som to steady its value at around 73/$1, highlighting the currency’s fragility. The Kyrgyz som, like other currencies in the region has lost about a third of its value this year.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) – Uzbekistan’s government will allocate 275b sums over the next 13 months or so to act as a safety-net for its four biggest banks to survive the region’s worsening economic depression.
The announcement of a credit line to state-owned Agrobank, the National Bank for Foreign Economic Activity, Microcredit Bank and Qishloq Qurilish Bank – is a another indicator that Uzbek policy makers have begun to recognise and react to the region’s worsening economic outlook. Last week, the Central Bank indicated that it was trying to gradually reduce the official value of its sum currency, in line with devaluations across Central Asia.
The banks’ safety-net, worth around $101m at the official exchange rate but unofficially worth around $45m at the Black Market rate, has been earmarked to support the banks’ liquidity, media reported. This effectively means it is a government slush fund created to bail out the banks.
The cash has been parcelled up, with 100b sums allocated to Agrobank, 75b sums to the National Bank for Foreign Economic Activity and 50b sums each for Microcredit Bank and Qishloq Qurilish Bank.
Earlier this month, the Fitch ratings agency said that Uzbek banks were generally stable.
“As internal capital generation at the state banks is moderate and lags growth, state banks are getting regular capital contributions from the government in order to comply with regulatory capital requirements,” Fitch said in its report on Nov. 11.
“Liquidity is comfortable due to solid buffers as well as potential state support.”
It also said that non-performing loans, considered those over 90 days late, were relatively low with 3% at Agrobank and 14% at Microcredit Bank.
Like the rest of the region, though, Uzbekistan has been struggling to cope with the sharp downturn in Central Asia’s economic health. This month the Uzbek government even started talking about selling off stakes in state-owned companies to increase capital and boost their knowledge- base.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)
