NOV. 15 2015 (The Conway Bulletin) – A Turkmen opposition website reported that the Turkmen authorities have placed restrictions on foreign currency withdrawals. The website, chronotm.org, is well-regard. It said the Black Market rate for the Turkmen manat has dropped to between 4.20 and 4.50/$1 compared to $3.60/$1 a few days ago.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) — The Kazakh tenge was steady this week, trading at around 307.2/$1, off an all-time low against the US dollar of 311/$1 earlier in November.
There is still much speculation by analysts on just how monetary policy in Central Asia’s biggest economy is going to change under new Central Bank chief Daniyar Akishev. He said that inflation was too high and appeared to make this his priority.
With this in mind, expect another interest rate rise at the Central Bank’s policy meeting next month — if the policy wonks don’t cancel it again. There are, though, two urgent problems, it seems to me, with the Kazakh monetary policy. People don’t know what it is or whether it works.
The new key interest rate — overnight repo rates — was only introduced in September. It was raised in October to 16% from 12% and then ignored in November when the Central Bank cancelled its policy meeting at the last moment. Does this interest rate have any credibility? Does the market even care about it? It doesn’t appear to have had any effect so far.
And Mr Akishev appeared to acknowledge as much when he said that a fall in oil price would send the tenge tumbling further. Oil prices, outside the Kazakh Central Bank’s control, are the driver of tenge value and not its key interest rate.
In neighbouring Kyrgyzstan, the som currency did continue to set new records against the US dollar. It hit an all-time low on Friday of 72.5/$1 versus 71.9/$1 at the start of the week. On Oct 1, the som had been valued at 68.8/$1, meaning that it has lost over 5% of its value in the past seven weeks.
As the Bulletin reports in the main section of the newspaper, information coming out of Turkmenistan is that its manat currency has devalued and that the government has placed restrictions on the amount of cash people can withdraw from the banks. Earlier this month, The Bulletin also reported on the devaluation of the Uzbek soum.
Even staunchly controlled currencies are feeling the pressure, it seems.
And over in the South Caucasus, it is a similar story. Since its sharp 33% devaluation in February, the Azeri manat has been kept steady but analysts have increased chat of a need to devalue again.
Both the Armenian dram and the Georgian lari were steady through the week.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 17 2015 (The Conway Bulletin) – Seemingly trying to defy logic, the Kazakh government said it wanted to double tax on petrol but that the price rise would not add to inflationary pressure in the economy.
The day after economy minister Yerbolat Dossayev said that he wanted to increase tax on petrol, the new head of the Kazakh Central Bank Daniyer Akishev also said inflation this year in Kazakhstan was likely to be above even the upper 8% estimate.
The tenge has almost halved in value since the Central Bank ditched its US dollar peg in August, forcing prices up across economy.
Shortly after the tenge lost its US dollar peg, the government also ditched it price control over petrol, allowing prices to increase to match the tenge devaluation.
And now Mr Dossayev has said that he wants tax on a tonne of petrol to rise to 10,500 tenge ($16.70) from 5,000 tenge ($34.10) which would equal, roughly, to an increase of around 5% for consumers.
Petrol prices have already risen around 25% this year and any further increase will be unpopular.
As for inflation in general, Mr Akishev, made Central Bank chief at the start of the month, said targeting inflation was now his highest priority.
“Our task now is to ensure stable inflation and get back to the range of 6-8% in 2016,” he said.
The problem for Kazakhstan is that with oil prices continuing to be suppressed, pressure builds on the tenge to fall further which means that inflationary pressure also builds.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s new Central Bank chief Daniyar Akishev said the tenge could fall further if oil drops below $40/barrel. The tenge has lost half its value this year. The price of Brent oil is around $44/barrel.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) – Prices in Armenia grew by 4.4% in the first 10 months of the year, media quoted the National Statistics Service as saying, pointing to high overall inflation for 2015.
Inflation has forced its way back onto the top of Central Bankers’ agenda this year. A collapse in local currencies’ values against the US dollar has triggered a sharp rise in prices for energy imports and domes- tic electricity production.
Inflation in Armenia is probably lagging inflation in neighbouring Georgia because the government has chosen to suck up the cost of the electricity price rises rather than pass
it on to consumers after a series of major demonstrations in the summer. In Georgia, the government has more successfully passed the cost of the electricity production on to consumers.
But, importantly, with another two months of the year to be factored into the final calculation, inflation in Armenia is already running above the initial estimates in the 2015 budget.
Trade turnover is also down, 20% lower in the first 10 months of the year compared to the same period in 2014. This is generally in-line with other economies across the Central Asia and South Caucasus region.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 13 2015 (The Conway Bulletin) — The Kyrgyz Central Bank intervened in the currency market, selling around $14m on Friday to halt the fall of the som. It still fell 3% over the week finishing at 72.1/$1.
In Kazakhstan, the tenge was stable at 307/$1, although it reached a record low of 312/$1 on Monday.
The Georgian lari was stable at 240/$1 throughout the week.
In Armenia and Uzbekistan, currencies fell faster than previously. The Armenian dram lost 1% to 480.9/$1 and the Uzbek sum fell by 0.5% to just above 2,700/$1 on the official market. On the Black Market, the US dollar is reportedly selling at 6,200sum.
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(News report from Issue No. 256, published on Nov. 13 2015)
NOV. 10 2015 (The Conway Bulletin) – The amount of cash in Kyrgyzstan’s banking system held in foreign currencies jumped by 6.7% to nearly 65% between January and August, the Central Bank said according to Kyrgyz media reports.
This is a steep rise and highlights a lack of confidence in Kyrgyzstan’s som. It has lost around 26% of its value against the US dollar this year despite repeated interventions by the Central Bank to prop it up.
Inflation has also increased, although this has slowed over the past couple of months, pressuring people’s savings.
Interest rates are at a 10%, lower than they were at the start of the year but higher than at any time since 2012.
Like its neighbours, Kyrgyzstan has been struggling to deal with the fallout from a deepening economic malaise which has hit the region. One of its biggest problems has been a sharp drop in remittances sent back to Kyrgyzstan from workers in Russia.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 256, published on Nov. 13 2015)
NOV. 10 2015 (The Conway Bulletin) – Armenia’s Central Bank lowered its key interest rate by half a percentage point to 9.75%, its lowest level since January, because of slowing inflation.
The interest rate move highlights the delicate balance that Central Banks across Central Asia and the South Caucasus are having to strike between defending their currencies and stimulating growth to navigate through a deepening economic crisis.
The Central Bank said a drop in commodities prices and slowing global demand had dented price growth.
It said that inflation last month measured 0.4%, compared to 1% in October 2014. Overall annualised inflation measured 1.9% for the 12 months to the end of October.
“The board estimates that this trend will continue in the coming months and will have a deflationary impact on domestic prices,” the Central Bank said of weakening global commodities prices.
Armenia’ currency, the dram, has dropped by 15% this year against the US dollar. Its interest rates had risen to 10.5% in February but prices in Armenia have slowed, dragging down overall inflation.
The biggest problem for Armenia, like most of its neighbours in the South Caucasus is the recession in Russia.
This has hit vital remittance flows and also savaged is key export market. The Armenian dram is now overvalued against the Russian rouble and demand inside Russia has also dropped, hitting overall export potential.
This month, as the Bulletin reports in this week’s Business News, the country’s biggest fish farm business declared itself bankrupt. Its biggest market had been Russia and this market had disappeared.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 256, published on Nov. 13 2015)
NOV. 11 2015 (The Conway Bulletin) – Kazakhstan wracked up a $4b current account deficit in the first nine months of 2015, the Central Bank said, a direct consequence of the fall in the price of oil and gas — its main exports.
This deficit compares with a $6b surplus in the same period last year and shows the impact of the collapse in energy and commodities prices.
The volume of Kazakhstan’s oil and commodities exports was the same in the first nine months of this year compared to last year but they dropped, heavily, in value, earning Kazakhstan far less cash.
The Central Bank data will intensify pressure on the Kazakh government to diversify its economy away from oil and gas.
And Kazakhstan’s monetary policy also played a role in current account deficit too.
Until the Central Bank abandoned its US dollar peg in August, after stubbornly refusing to devalue alongside the Russian rouble, Kazakh exports to Russia were just too expensive. And this hurt Kazakh industry. Russia is one of its main export market.
And this showed up in Kazakhstan’s trade balance. Although still positive, it shrank by almost two thirds. In Jan-Sept 2015, Kazakhstan’s exports exceeded imports by $10.7b, a drop from $30.6b during the same period in 2014.
These figures are a stark reminder of the impact of the regional economic malaise on Kazakhstan. The 40% devaluation of the tenge after the Central Bank ditched its US dollar peg will help Kazakh exporters but the government really needs an increase in oil and gas prices to restore its revenues.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 256, published on Nov. 13 2015)
NOV. 9 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank dropped the value of its sum currency to 2,706 sum/$1, down from 2,635/$1, a drop of 2.6%. On the Black Market, the dollaruz.com website reported that the fall was even greater. Currencies across Central Asia are under increasing pressure from a fall in the value of commodities and a recession in Russia.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 256, published on Nov. 13 2015)
