Tag Archives: economy

Currencies: Georgian lari, Azerbaijani manat

MARCH 27 2017 (The Conway Bulletin) — In a week of light trading and only incremental currency fluctuations, the Georgian lari performed strongest pushing up by 1.6% to 2.44/$1.

This is its highest level since the start of November last year and reflects a general strengthening of Georgia’s macro-economic scores.

Of the other currencies, only the Azerbaijani manat and the Uzbek som moved more than 1%. The manat continued its strong performance since February by moving up another 1.3% to 1.7050/$1, a five month high. Bloomberg described the manat as the strongest performing currency in the world this year. It also said, though, that ordinary Azerbaijanis still had little confidence in their currency after two devaluations in 2015 halved its value.

It said this lack of confidence showed through in Central Bank data which said 81.3% of bank deposits were now kept in US dollars, up from 79.6% at end-Dec.

ENDS

(News report from Issue No. 322, published on March 27 2017)

Azerbaijan’s economy will shrink again in 2017, says ADB

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MARCH 14 2017 (The Conway Bulletin) — Azerbaijan’s economy will continue to shrink in 2017, the Asian Development Bank said in a grim assessment of the country’s outlook following a disastrous 2016.

Overall, the ADB said that the Azerbaijani government’s prediction of 1% growth in 2017 was wildly over-optimistic and that a decrease of 1.1% was more likely. Last year,

Azerbaijan’s oil-backed economy shrunk by 3.8%, its worst year of economic activity since the 1990s.

“Our preliminary assessment as of today is minus 1.1 percent … and it’s most likely that our … assessment of GDP for this year will remain at the negative level,” Nariman Mannapbekov, the ADB’s country chief, told Reuters in an interview in Baku.

The ADB assessment will be a major blow to Azerbaijan which has been looking for some growth.

And, once again, Mr Mannapbekov urged the Azerbaijani government to focus on diversify the economy away from oil.

The slump in oil prices has hit Azerbaijan hard, forcing the government to slash funding.

ENDS

(News report from Issue No. 321, published on March 20 2017)

Inflation at correct level, says Kazakh Central Bank chief

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MARCH 13 2017 (The Conway Bulletin) — Kazakh Central Bank chief Daniyer Akishev said that he wanted to target inflation of 6-8% by the end of the year. It currently measures 7.8% which is down from a recent high of 17.7% in July 2016. Kazakhstan’s economy has stabilised after falling heavily in the previous couple of years, a drop linked to the fall in oil prices and tenge weakness.

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(News report from Issue No. 321, published on March 20 2017)f

Kazakh Central Bank says to buy KKB bad debt

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ALMATY, MARCH 15 2017 (The Conway Bulletin) — Kazakhstan’s Central Bank confirmed that it would buy up 2.4 trillion tenge ($7.5b) of bad debt owned by Kazkommertsbank, effectively subsidising its purchase by Halyk Bank.

Halyk Bank, owned by the daughter and son-in-law of Kazakh president Nursultan Nazarbayev, agreed to buy Kazkommertsbank earlier this year for an undisclosed amount in a deal that will give it a 38% market share and Kazakhstan’s elite control of the banking sector.

The 2.4 trillion tenge bad debt held by Kazkommertsbank is a legacy of its purchase of BTA Bank from the government. The government had

bought it in 2008/9 when it was about to collapse during the Global Financial Crisis.

Separately, deputy Central Bank chairman Oleg Smolyakov said it would take two to three months for Halyk Bank to carry out its due diligence of Kazkommertsbank before the takeover could be completed.

ENDS

(News report from Issue No. 321, published on March 20 2017)

Currencies: Azerbaijani manat

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MARCH 20 2017 (The Conway Bulletin) — The Azerbaijani manat continued its strong return to form, pushing up to 1.7286/$1 by March 17, its strongest level against the US dollar since the beginning of November 2016.

At its weakest point, the manat had been valued at 1.9517/$1 in February, meaning that it has strengthened by nearly 11.5%.

The European Bank for Reconstruction and Development (EBRD) has said that this manat strength is probably due to a transfer of 7.5b manat ($4.3b) from the SOFAZ, the state oil fund, to the Central Bank to boost the economy. The Azerbaijani economy has been looking fragile, because of the depressed price of oil, and it has needed the cash injection.

The Kazakh tenge and the Georgian lari also rose marginally in value throughout the week, although the Kyrgyz som and the Tajik somoni fell in value. The Kyrgyz som is surfing near its lowest point since mid-September 2016.

ENDS

(News report from Issue No. 321, published on March 20 2017)

Kyrgyzstan relaxes Iranian visa rules

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MARCH 16 2017 (The Conway Bulletin) — Kyrgyzstan said that it had simplified visa rules for Iranians, matching a trend in the region. Iran and Kyrgyzstan have been boosting trade, diplomatic and tourist links. Georgia and Armenia have already scrapped visa requirements for Iranians and other countries are also relaxing rules. Iran is seen as an important economic driver for the region, especially since some sanctions were lifted last year.

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(News report from Issue No. 321, published on March 20 2017)

Kazakh C.Bank loans Delta $31m

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MARCH 7 2017 (The Conway Bulletin) — As part of its well-publicised plan to help its struggling banking sector, the Kazakh Central Bank said that it had loaned Delta Bank, one of the smaller banks in Kazakhstan, 9.8b tenge ($31m), media reported. The loan, made on March 3, was linked to a missed coupon repayment that Delta Bank had needed to pay. This was connected to pension obligations.

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(News report from Issue No. 320, published on March 13 2017)

Uzbek Central Bank issues new banknote

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MARCH 10 2017 (The Conway Bulletin) — Uzbekistan’s Central Bank printed its first 10,000 som banknote, an official nod, perhaps, to high levels of inflation and the falling value of its currency. At today’s official exchange rate of 3,453/$1, the new note will be worth just under $3. The Central Bank introduced the 5,000 som banknote in 2013 and the 1,000 som banknote in 2001. Uzbekistan’s economy has been under pressure, pushing up inflation and devaluing its currency. The som has fallen by 13% since August.

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(News report from Issue No. 320, published on March 13 2017)

Armenia PM wants more investment

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YEREVAN, MARCH 9 2017 (The Conway Bulletin) — In an interview with the Reuters news agency, Armenian PM Karen Karapetyan said that he would be prepared to cut state spending to attract more private investment in try to reboot the country’s stalling economy.

In particular, Mr Karapetyan, who had previously worked as the head of the national gas distributor ArmRosGazprom and is known to retain strong links with Russia, said that he was looking to attract up to $850m of private investment this year to reduce Armenia’s reliance on Kremlin handouts.

“Regular structural reforms will be implemented in Armenia, even if these reforms are unpopular,” Reuters quoted him as saying.

Investors have been looking to the Armenian government for strong leadership. Mr Karapetyan, who took over in September 2016, is the third PM since April 2014. His two predecessors quit after failing to transform expensive state pensions and losing control of an armed takeover of a police station.

In 2015, the government also backpedaled over proposed reforms to electricity tariff increases that it wanted to impose after a series of large street demonstrations.

Armenia has been suffering from deflation and low growth rates, an economic downturn shared by the region which is dependent on Russia as an economic engine. Russia has been suffering from a recession triggered by a drop in oil prices and Western-led sanctions.

Mr Karapetyan said that he want to cut the government’s deficit to 2.7% of GDP from 5.9% in 2016.

“It will have a negative impact,” he said in the interview. “But we want to compensate it through private investment.”

ENDS

(News report from Issue No. 320, published on March 13 2017)

Currencies: Georgian lari, Kazakh tenge, Uzbek som

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MARCH 8 2017 (The Conway Bulletin) — Pushed up by decent economic data and a rise in interest rates to battle inflation which threatens to pick up this year, the Georgian lari hit a four-month high against the US dollar on March 7 of 2.45/$1, according to data from Bloomberg.

It slipped back slightly towards the end of the week to 2.5/$1 but it is still 9.1% stronger than on Jan. 1.

The Kazakh tenge fell slightly over the past fortnight but it is, too, performing well in 2017, racking up gains of around 5% this year.

As for the Uzbek som, as shown in our graph, the authorities appear to have speeded up their managed devaluation of the currency. The official exchange rate is now at 3,452/$1 an all-time low. The graph clearly shows how the steps taken to devalue the som have increased in size since mid-February. The Uzbek som is now 4.3% weaker against the US dollaxr than it was on Feb. 16. This managed downward trajectory for the som is expected to continue.

ENDS

(News report from Issue No. 320, published on March 13 2017)