Tag Archives: currency

Azerbaijan may move to currency free float

OCT. 8 2013 (The Conway Bulletin) — Azerbaijan may ditch pegging its manat currency to the US dollar in the medium term and move to a free float, Khagani Abdullayev, deputy head of Azerbaijan’s Central Bank said in an interview with the Conway Bulletin.

The Azerbaijani manat has been pegged to the US dollar since March 2009. The Central Bank hitched it to the US dollar to secure it during the financial crisis. Now, though, the scenario has changed and Azerbaijan’s economy is starting to grow quickly again, putting the currency under pressure.

“In the near future the plan is the continuation of the peg while a managed float is planned for the mid-term,” Mr Abdullayev said after giving a lecture in Washington DC.

On the economy, he also said cash still made up roughly half the transactions in Azerbaijan.

“The Central Bank will continue to increase its efficiency as Azerbaijan transitions to a more cashless society. Currently 50% of M3 is made up of cash,” Mr Abdullayev said. M3 is a technical reference to money supply.”

Islamic Banking has become increasingly prevalent in Asia and Mr Abdullayev said that although Azerbaijan wouldn’t actively promote this brand of finance, it would play a role in the future.

“The development of Islamic finance in Azerbaijan is a long term objective,” he said.

ENDS
Copyright ©The Conway Bulletin — all rights reserved

(News report from Issue No. 158, published on Oct. 30 2013)

People in Kazakhstan lose confidence in the tenge

SEPT. 6 2013 (The Conway Bulletin) — A drop in savings held in Kazakh tenge in July showed people were losing confidence in Kazakhstan’s currency, the respected kapital.kz said. Central Bank data showed 350b tenge was withdrawn from bank accounts in July, reducing the proportion of savings held in tenge to about 61%, down from 66%.

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(News report from Issue No. 151, published on Sept. 11 2013)

Azerbaijan continues to buy gold

AUG. 27 2013 (The Conway Bulletin) — Azerbaijan continued to buy gold in July, news agencies quoted the IMF as saying, part of its stated plan to increase its bullion reserves. As well as buying gold, Azerbaijan has also said that it wants to increase its portfolio of property and currencies.

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(News report from Issue No. 150, published on Sept. 2 2013)

Kazakh Central Bank switches to currency basket

AUG. 28 2013 (The Conway Bulletin) — Keen to strengthen control over the tenge, the Kazakh Central Bank switched from managing the value of its national currency against the dollar to using an aggregated basket of currencies.

The US dollar will still make up 70% of the new basket, Kazakh Central Bank chief Grigory Marchenko said, but the euro will also make up 20% and the Russian rouble 10%.

This system is more in line with a currency basket used by the Russian Central Bank to determine the value of the rouble.

In July, the Central Bank came under pressure to devalue the tenge after it dropped to 154 to the dollar. Since then it has rebounded to about 152 tenge to the dollar.

This currency basket will give the Kazakh Central Bank more room to intervene in the markets to defend the value of its currency. It scrapped a managed corridor value for the tenge in March 2011.

Two years earlier, in February 2009 during the global financial crisis, the Kazakh Central Bank devalued the tenge by 21%.

ENDS
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(News report from Issue No. 150, published on Sept. 2 2013)

Kazakhstan pegs tenge to currency basket

AUG. 28 2013 (The Conway Bulletin) — Kazakhstan’s Central Bank ditched its US dollar peg for the Kazakh tenge in favour of a currency basket. Central Bank chief Grigory Marchenko said the currency basket breakdown would be: 70% US dollar, 20% euro and 10% Russian rouble.

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(News report from Issue No. 150, published on Sept. 2 2013)

Kazakhstan denies tenge devaluation

JULY 25 2013 (The Conway Bulletin) — Kazakhstan’s Central Bank scotched rumours of an impending devaluation of the tenge. The tenge is tightly bound to the Russian rouble which is relatively stable. In Feb. 2009, the Kazakh central bank devalued the tenge by 21% shortly after their Russian counterparts devalued the rouble.

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(News report from Issue No. 145, published on July 29 2013)

Dollars fuel Uzbekistan’s black market

TASHKENT/Uzbekistan, JUNE 10 2013 (The Conway Bulletin) — The black market currency traders in Taskhent’s bazaars are hardly inconspicuous.

“Dollars, dollars. Russian roubles,” they say.

Huge wads of cash change hands as people exchange dollars for Uzbek sums. The black market currency trade in Uzbekistan is big business and well established.

With the largest note worth a mere 1,000 sum (roughly 50 cents), the piles of money can be hefty. The trade is visible, but the police in Tashkent’s bazaars don’t step in; they’re taking a cut.

This currency black market has traditionally offered better rates than the banks. Exchanging $1,000 legally will give you about 2 billion sum, while on the black market you’ll receive around 2.7 billion sum.

Since February, the Uzbek government has banned people from buying cash dollars legally at all. Those needing hard currency must deposit money on debit cards which they can only use abroad.

When this ban on buying dollars came into force it sparked wild black market rate fluctuations and speculation that the government was out to smash this lucrative illegal trade. Such talk was short-lived, however, and the shadowy forces controlling the black market made a fortune on the exchange rate fluctuations.

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(News report from Issue No. 138, published on June 10 2013)

Kazakh banknote wins international award

MAY 17 2013 (The Conway Bulletin) — In terms of banknote sophistication — artwork and anti-forgery security — Kazakhstan is world class.

The International Bank Note Society named Kazakhstan’s 5,000 tenge note, worth around $33, as the best new issue of 2012.

This is the second consecutive year that Kazakhstan has won the award after its new 10,000 tenge note won in 2012.

With the help of the British banknote printer De La Rue, the Kazakh Central Bank designed and launched the new 5,000 tenge banknote on New Year’s Eve 2011/12.

The judges praised its bright orange colour as well as the banknote’s designs, including an outline of the country, the iconic Soviet-built Hotel Kazakhstan in Almaty and Independence Statue in the centre of the city.

The note also contains various anti-forgery watermarks and other devices that improve its security.

Unusually for banknotes, the 5,000 tenge note, which beat Canada’s 50 dollar bill and the Jersey 100 pound bill for the award, does not carry the image of a famous national person.

If banknote art and sophistication is a sign of a confident, growing economy that is increasingly proud of its currency and aware of its national symbols, then Kazakhstan is definitely moving in the right direction.

(News report from Issue No. 135, published on May 20 2013)

Cash ban complicates ordinary life in Uzbekistan

FEB. 8 2013 (The Conway Bulletin) – On Feb. 1, Uzbekistan banned buying foreign currencies with cash. Officially, the ban was imposed to stamp out Uzbekistan’s burgeoning black market. Unofficially it appears to be another form of control over ordinary people.

A black market for US dollars in Uzbekistan has been vibrant for years because of heavy currency controls imposed by the government. These controls made it far cheaper to buy US dollars under the counter at the back of a carpet shop than it did in a bank.

But reports from Tashkent already suggest that strategy of banning currency transactions in cash to quash the black market, if this was the real aim, may have backfired. Despite the crackdown US dollars are still being traded. According to Eurasianet, the effect of the currency restrictions was to limit supply of US dollars and push prices up by roughly 40%.

The restrictions on US dollars may also effect wider sales. US dollars are often used in Uzbekistan to buy cars or houses as using sum, the local currency, in a large cash purchase is practically impossible because of the piles of notes needed.

Uzbek officials will point out that if you have a bank account you can, electronically, still buy US dollars. The worth of this, in a cash based economy, is, though, highly questionable.

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(News report from Issue No. 123, published on Feb. 8 2013)

Uzbekistan restricts dollars

JAN. 30 2013 (The Conway Bulletin) – Uzbekistan’s Central Bank has banned the cash exchange of foreign currencies, mainly US dollars, from Feb. 1, Radio Free Europe/Radio Liberty reported. The Central Bank said it needed to ban the exchange of dollars to clamp down on Uzbekistan’s burgeoning black market. Dollars can still be bought electronically.

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(News report from Issue No. 122, published on Feb. 1 2013)