Tag Archives: currency

Currency woes in Uzbekistan, Georgia and Armenia

MAY 16 2016 (The Conway Bulletin) – An IMF paper on the state of money markets across the South Caucasus and Central Asia said that most currencies are still overvalued against the US dollar, despite depreciations that have taken place over the past 18 months. The IMF highlighted that in January the Uzbek sum was 30% above its market value, and the Georgian lari was around 15% overvalued. The Armenian dram was the only currency that, according to the IMF, traded below its value.

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(News report from Issue No. 281, published on May 20 2016)

Manat stabilised, says Azerbaijan’s Bank chairman

MAY 9 2016 (The Conway Bulletin) – Elman Rustamov, chairman of Azerbaijan’s Central Bank, said the manat currency will maintain a stable exchange rate with the US dollar for the rest of the year, dismissing rumours of further depreciation. The Central Bank devalued the manat in February 2015 and later, in December, ditched the currency peg to the US dollar. It is now worth half its Jan. 2015 value.

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(News report from Issue No. 280, published on May 13 2016)

Cash shortage spreads to Uzbek capital

MAY 2 2016 (The Conway Bulletin) – Several employees at state-owned companies in Tashkent have not received payment since February, according to sources interviewed by Eurasianet. This is a sign that a shortage of hard currency, previously confined to the provinces, has spread to Uzbekistan’s capital. Wage arrears cause distress among the population. Last year, a leaked letter from the Central Bank revealed a shortfall of 1.5 trillion sum ($517m at the official rate) in the state budget.

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(News report from Issue No. 279, published on May 6 2016)

Georgian CBank intervenes, again

MAY 5 2016 (The Conway Bulletin) – Georgia’s Central Bank intervened in the currency market for the sixth time in two months, in an effort to dampen the appreciation of its lari currency. The Central Bank bought $20m, injecting lari into the market. The intervention came as the lari reached 2.21/$1, its strongest rate since July 2015.

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(News report from Issue No. 279, published on May 6 2016)

Kazakhstan’s CBank cuts interest rate as inflation begins to slow

MAY 5 2016, ALMATY (The Conway Bulletin) — Kazakhstan’s Central Bank cut its key interest rate by two percentage points to 15% because it said that inflation was slowing and the overall economic outlook was improving.

The consumer price index grew in April to an annualised rate of 16.3%, its highest since 2009, but the Central Bank said that the pace of inflation had slowed.

“Seasonally adjusted, annualised month-on-month inflation for each of the last three months was within the target range for the annual inflation set between 6% and 8%,” the Central Bank said in a statement linked to its rate change.

“A survey of households also showed that expectations of inflation have subsided as well.”

After months of poor economic data and a 50% devaluation of the tenge currency, any prognosis on Kazakhstan’s economy which is even vaguely positive will be seized upon and lauded. This is the first time in months that Kazakhstan’s Central Bank has shown confidence in its ability to control the money market, a sign that the worst period of a regional economic downturn might be over.

Still, the Central Bank did add a large dash of caution to its outlook.

It said that a potential downside risk to the economy was the “increased tenge-denominated high interest rate liabilities” held by commercial banks, which could put pressure on the financial sector. This is, essentially, a reference to bad loans.

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(News report from Issue No. 279, published on May 6 2016)

Turkmenistan’s economy needs reforming, says IMF

MAY 5 2016 (The Conway Bulletin) – Turkmenistan must push through more structural reforms of Soviet era policies and characteristics still embedded in its economy if it is to navigate its way through an economic storm that has hit the region, the IMF said after a mission to Ashgabat.

Turkmenistan’s economy grew 6.5% last year, the IMF said, but there is likely to be a slowdown in 2016 because its economy it too tightly linked to gas.

“2016 could see another slight slowdown in growth on the back of a broadly stagnant hydrocarbon economy and slowing (albeit still massive) investment,” the IMF said in a statement.

In its assessment, the IMF praised austerity measures taken by the government over the past 18 months to counter the impact of the economic downturn. In particular, it praised the devaluation of the manat currency and the decision to phase out subsidies to the population.

“A fundamental re-orientation of the economy through a further acceleration of wide-ranging structural reforms, including in the areas of business climate and governance, as well as market-driven diversification, offers the best way to boost future growth rates,” the IMF said.

Turkmenistan devalued its manat currency by 19% on New Year’s Day 2015, its first currency devaluation for seven years and this year it said that it would scrap much cherished state subsidies of utilities.

Both policy moves were designed to bolster Turkmenistan’s listing economy.

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(News report from Issue No. 279, published on May 6 2016)

Azerbaijan lifts loan ban

MAY 5 2016 (The Conway Bulletin) – Azerbaijan’s government lifted a month-long ban on foreign currency loans, official media reported. The country’s Financial Markets Supervisory Authority, which acts as a regulator, had forbidden banks from granting loans denominated in foreign currency on April 5 to try and strengthen the local manat currency.

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(News report from Issue No. 279, published on May 6 2016)

Kazakhstan’s $1 stores profit in tough economic times

ALMATY, APRIL 26 2016, (The Conway Bulletin) — A chain of shops touting themselves as ‘$1 stores’ has opened up in Kazakhstan, one of the few retailers apparently prospering during an increasingly vicious economic downturn.

The stores, which operate under the Russian franchise Odna Tsena, carry a classic pared-back budget look and only sell products for 300 tenge (90 cents). Under the slogan “Buy without stress!”, they sell everything from washing up liquid and toilet rolls, to processed food and toys.

And they are busy. On a midweek trip to Odna Tsena, which means One Price, in Almaty, a Bulletin correspondent spoke to four shoppers. They were all women and all appreciated the shop’s discount value.

Nataliya said that she visited the shop almost weekly.

“There is a lot of choice, it’s very comfortable. I usually buy plates and dishes and some toys for my child,” she said. “Compared to other shops it is much better.”

This store opened in December 2015, in the middle of an economic storm which has forced a 50% devaluation of the tenge, pushed up inflation to levels not seen since the Global Financial Crisis of 2008/9 and pressured cost-cutting companies to scrap thousands of jobs.

Across the world, discount stores have tended to prosper during the tougher times and Odna Tsena is bullish about its own prospects.

Botagoz Tlemisova, a director at Odna Tsena, said that the chain planned to open 50 more stores across Kazakhstan in the next three years.

“We’ve been operating for just a few months, but already we’ve seen the loyalty of our customers. Our research has shown that more than 50% of shoppers come back to our shops every two to three weeks,” she told media.

In the Almaty shop, Svetlana said she had popped in because she had heard about the knock-down prices.

“I am surprised that everything here has one price, and it is cheap. It is very relevant nowadays when prices are rising on everything,” she said. She also said she would return soon.

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(News report from Issue No. 278, published on April 29 2016)

EBRD praises Kazakh economy

APRIL 8 2016 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) has defended Kazakhstan’s economic record over the past couple of years despite a sharp currency devaluation, rising inflation and thousands of job losses, media reported. Media quoted the EBRD’s chief in Kazakhstan, Janet Hackman, saying that Kazakhstan was not faced with an economic crisis because of steps it had taken recently to join the WTO and move to an inflation targeting monetary policy.

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(News report from Issue No. 276, published on April 15 2016)

Editorial: Uzbek buses

APRIL 8 2016 (The Conway Bulletin) – People in Uzbekistan will find it harder to pay both their utility bills and bus fares from this month.

The government has ordered price increases across the board from April 1, signalling latent inflation in its economy.

Utility prices went up around 8.5% but bus prices have risen by 20% and this is going to be significant. Public transport in Tashkent delivers several hundreds thousand passenger journeys every day, making bus ticket prices a highly sensitive issue.

The city government blamed high fuel prices for the new ticket price of 1,200 sum ($0.41 at the official rate).

Officially, the Uzbek sum has lost only 10% of its value over the past six months against the US dollar, but Black Market rates tell a different story.

The Uzbek currency is spiralling downwards and this will push up inflation. Accurate economic data is hard to come by from Uzbekistan but there is no arguing with the higher bus prices. This is the accurate inflation measure that is needed to gauge price rises in Uzbekistan.

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(Editorial from Issue No. 275, published on April 8 2016)