Tag Archives: currency

Azerbaijan devalues manat by a third

FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank cut the value of its manat currency overnight by a third in response to the falling value of the Russian rouble and the collapse in oil prices.

Many analysts said that a devaluation was long overdue although none expected such a sharp correction.

And, as a Bulletin correspondent reports from Azerbaijan, the devaluation has angered and frustrated local people. Ordinary people have watched as the value of their savings has plummeted, inflation has soared and economic growth rates have been cut.

This is the major risk that the Central Asian and South Caucasus economies run when trying to deal with an increasingly nasty economic downturn that has enveloped the region. They need to adjust their monetary policies while still retaining the trust of their populations.

Part of the problem has been the speed with which the economic downturn has hit the region.

Most Central Banks in Central Asia and the South Caucasus have allowed their currencies to depreciate slowly although Turkmenistan, and now Azerbaijan, have opted for a sudden devaluation this year.

Kazakhstan is still resisting another correction — it cut the value of its tenge currency by 20% last year — but it must now only be a matter of time before it succumbs.

ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015

Azerbaijani devaluation angers people

FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank slashed the value of its manat currency by a third overnight, a sudden move that took businesses and ordinary Azerbaijanis by surprise.

Previously Azerbaijani officials had said that they would release the manat from its dollar peg, suggesting only a gradual devaluation to adjust to a sharp decline in the Russian rouble.

They have now justified the sudden devaluation by saying that they had little choice but to act in the face of a collapse in oil prices and economic turbulence in Russia.

“This decision was made in order to support diversification of Azerbaijan’s economy, strengthen its international compatibility and export potential as well as to provide balance of payments sustainability,” the Central Bank said in a statement.

On the streets of Azerbaijan’s towns, though, the devaluation was less generously viewed.

Veli, 29, a small business owner in Guba, a northern city, told a Bulletin correspondent that he was in shock.
“I believed the government. I kept my savings in the manat,” he said. “I lost third of my savings. It’s painful. It’s theft by the government.”

He said that he had no choice but to increase the price of the electronic goods he was selling in his shop — fuelling rising inflation.

Sahiba, a mother of two young children living in the city of Gazakh on the western border with Georgia echoed these sentiments. Her husband is a government official but has had his pay cut already this year.

“We’ve got a mortgage,” she said. “I don’t know what we’ll do.”

ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Tajik migrants head home

FEB. 22 2015 (The Conway Bulletin) — The falling rouble has persuaded up to half of St Petersburg’s Central Asian casual work force to return home, the AFP news agency reported.

St Petersburg’s deputy governor, Igor Albin, reportedly said that 50% of the snow sweepers, normally from Central Asia, had left the city.

AFP’s correspondent in St Petersburg directly quoted the head of a snow sweeping company who gave similar insight, although with a lower percentage heading home.

“Almost 30% of the workers who left to spend New Year’s as usual with their families in Uzbekistan or Tajikistan have not come back,” he said.

Uzbekistan, Kyrgyzstan and Tajikistan are most vulnerable to this trend. Tajikistan holds the dubious position as the country that is most reliant on remittances. These make up about 50% of its total GDP.

The Tajik Central Bank has tried to prop up its currency against the falling Russian rouble although it has warned that inflation is creeping up.

In Dushanbe, an immigration official told AFP that only half the number of Tajiks were leaving to take jobs abroad this year, compared to the same period in 2013.
ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Georgia CBank props up lari

FEB. 24 2015 (The Conway Bulletin) — In an effort to stop its currency from sliding further, the Georgian Central Bank said it had sold another $40m of its reserves. This is the third time this month it has sold US dollar reserves to prop up its lari currency.
ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 220, published on Feb. 25 2015)

Gradual devaluation for tenge

FEB. 11 2015 (The Conway Bulletin) — Kairat Kelimbetov, head of the Kazakh Central Bank, hinted for the first time that he was prepared to allow a gradual devaluation of the tenge. He told Russian media: “We will not allow a one-off shock devaluation and instead will work within the framework of a smooth and flexible exchange rate mechanism.”
ENDS

(News report from Issue No. 219, published on Feb. 18 2015)

Azerbaijan to ditch US dollar peg

>>Dollar being dropped to counter oil price slip>>

FEB. 15 2015 (The Conway Bulletin) — Azerbaijan plans to scrap its currency peg to the dollar to ease the impact of falling oil prices, Azerbaijani Central Bank chief, Elman Rustamov, said in an interview with the Financial Times.

The comments appeared to trigger a reaction on the street. Bulletin correspondents reported long queues forming outside exchange booths in Baku the day after the interview was published. People were anticipating another currency devaluation and were trying to exchange their Azerbaijani manat into US dollars.

Like other countries in the region, Azerbaijan has been trying to deal with the fallout from Russia’s tumbling rouble and the decline in oil prices.

One of the major side-effects of the economic turmoil has been an increase in inflation, as Mr Rustamov pointed out in the interview.

“It is critical to make some kind of corrections to fiscal and monetary policy,” he said. “We consider that we should transit to a more flexible exchange rate regime and gradually we will transit to an inflation-targeting regime.”

He didn’t say when the US dollar peg would be dropped but he did say that the new basket would hold more Euros, reflecting more accurately Azerbaijan’s trade make-up. Economists said they expected a gradual decline in the value of the manat of around 1% every month.

And people in Baku are becoming increasingly concerned about economic instability.

Mahammad Qasimli, 57, a school teacher said he was concerned hyperinflation from the mid-1990s may return.
“Every time when there is economic turmoil, the poor suffer the most,” he said.”
ENDS

(News report from Issue No. 219, published on Feb. 18 2015)

Georgia Central Bank increases rates

FEB. 11 2015 (The Conway Bulletin) — As expected, Georgia’s Central Bank increased its key interest rate by 50 basis points to 4.5% to try and dampen inflation. The Georgian lari has lost 8.5% of its value against the US dollar this year, increasing inflationary pressures.
ENDS

(News report from Issue No. 219, published on Feb. 18 2015)

Georgia exports drop

FEB. 13 2015 (The Conway Bulletin) — Georgia’s foreign trade dropped by 9% in January compared to a year earlier, the national statistics office said. It blamed the Ukrainian civil war and the fall in the rouble for reducing demand for Georgia’s key exports — wine, water and citrus fruits.
ENDS

(News report from Issue No. 219, published on Feb. 18 2015)

Kyrgyz Central Bank spends heavily

FEB. 17 2015 (The Conway Bulletin) — Kyrgyzstan has spent around 10% of its currency reserves this year defending its currency from devaluing, media quoted the chairman of the Central Bank, Tolkunbek Abdygulov, as saying. The Kyrgyz som is closely linked to the Russian rouble and has devalued against the US dollar by around 20%.
ENDS

(News report from Issue No. 219, published on Feb. 18 2015)

Pavlodar warns of Russian imports

>>Rouble devaluation makes Russian goods cheap>>

FEB. 6 2015 (The Conway Bulletin) — Local authorities in Kazakhstan said they are worried about cheap goods from Russia flooding its northern markets. The rouble has halved in value, making goods from Russia cheap for Kazakhstanis.

Duisenbai Turganov, vice-governor of the Pavlodar province, directed his concerns to Kazakh deputy PM, Bakhytzhan Sagintayev.

He said Russian goods flooding the Kazakh market could be classified as a dumping practice.

“Prices of Russian competitors are 30-60% lower than Kazakh suppliers can offer. This has a negative impact on the activities of the local industrial enterprises,” the tengrinews.kz website quoted him as saying.

The row piles more pressure on to the Eurasian Economic Union which has become tainted by commercial wars among the members. Belarus and Armenia are also members.

And we’ve seen this issue before. Since December, Kazakhs are crossing the border to buy cheap goods in Russia. Although quantities may be risible for Moscow, on the other side of the fence, buying Russian goods makes a difference for Kazakhs.

From cars, to poultry, to petroleum products, the large-scale entry of cheap goods from the north into Kazakhstan creates an imbalance in the Kazakh economy and puts local factories under stress.

The governor in Pavlodar may be talking peanuts to Russia, but these are vital components of the socio-economic makeup of the northern regions of Kazakhstan.
ENDS

(News report from Issue No. 218, published on Feb. 11 2015)