APRIL 4 2016 (The Conway Bulletin) – Inflation in Georgia is slowing, figures from the Georgian Statistics Committee revealed. In March, prices grew by only 0.3%. Annualised inflation fell to 4.1% from 5.6% the previous month. An 18.7% year-on-year increase in medical products prices was the main component of inflation.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 275, published on April 8 2016)
APRIL 8 2016 (The Conway Bulletin) – Central Banks in Central Asia are boasting about de-dollarisation these days, painting a rosy picture of their success in combating their economies’ dependence on the greenback.
A closer look at the stats, however, reveals that a combination of heavy interventions in the currency markets and interest rate tweaking were the main drivers of healthier Kazakh tenge and Kyrgyz som.
But now Central Banks have to grapple with inflation, which continues to grow, and demand for credit, which continues to shrink.
Central Banks propped up local currencies, against a US dollar that has now slowed its rise against Emerging Markets currencies and commodities.
Restrictions on exchange points, bans on pricing goods in dollars and public calls for confidence have all contributed to curbing the use of dollars.
But Central Banks might have run out of options now and they need to steer away from “crisis mode” if they want to really restore confidence in their still ailing currencies.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(Editorial from Issue No. 275, published on April 8 2016)
APRIL 2 2016, BISHKEK (The Conway Bulletin) — Kyrgyzstan banned labelling goods for sale in anything other than Kyrgyz som, a move it said would help strengthen the national currency and reduce its economy’s reliance on US dollars.
Since a crash in the value of local currencies in Central Asia and the South Caucasus last year, de-dollarisation has become a buzzword among Central Banks.
In Kyrgyzstan, the authorities have concentrated on persuading more people to use som over US dollars to buy goods. And this now includes banning shopkeepers from pricing goods in US dollars.
The punishment for pricing goods in US dollars still hasn’t been announced but it will be a challenge to the authorities to impose the ban successfully.
Zhumakadyr Akeneyev, a former head of oil traders association and now an economic commentator, said de-dollarisation was a positive step.
“Finally, for the first time since independence, we have turned our face to the national currency,” he said.
Other Kyrgyz said that while they broadly welcomed the move, they were also sceptical that it would work.
“I like this idea. Many people, who borrowed money from the banks in foreign currencies, suffered from devaluation of som,” said 25-year-old Saltanat. “However, I think the government should leave some space for use of foreign currencies too.”
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 275, published on April 8 2016)
APRIL 2 2016 (The Conway Bulletin) – The cost of public transport in Uzbekistan, which is run by the state, rose 20% on April 1, various opposition websites reported. The price increase is more evidence of inflationary pressure building in the Uzbek economy. Utility prices have also risen recently and information leaking out of Uzbekistan has suggested that the value of the Uzbek sum currency on the Black Market has fallen.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 275, published on April 8 2016)
APRIL 5 2016, ALMATY (The Conway Bulletin) — Kazakhs have increased the amount of tenge they are keeping in bank accounts, suggesting that they now trust the currency once again despite it halving in value over the past seven months, Kazakhstan’s Central Bank said.
In February, Central Bank data showed that the amount of tenge saved in banks rose to 1.53 trillion tenge ($4.5b), up 5% from January. Significantly, too, the proportion of tenge as savings grew to 22% of the total, up from 20% in January.
Analysts said that two factors had contributed to this renewed confidence in the tenge. The first was that this year, the tenge has actually strengthened against the US dollar to around 340/$1 compared to an all- time low in mid-January of 390/$1.
In March, Kazakhstan’s Central Bank heavily intervened in the currency market, buying $1.2b on the Kazakh Stock Exchange, around 2.6 times more than it bought in February.
This, together with high liquidity ensured by capital held at the Single Pension Fund, helped to improve the tenge’s position, analysts said.
“The Central Bank now faces the problem of too much liquidity and too high interest rates,” Askar Akhmedov, senior analyst at Halyk Finance, part of one of the largest Kazakh banks, said in a report.
Secondly, analysts said the Central Bank’s policy of increasing interest rates on tenge savings in banks to 14% from 10%, in addition to dropping the interest paid on foreign currency savings to 2% from 3% was working.
On the streets of Almaty this more positive view of the tenge was, generally, reflected.
A pensioner said: “It is our national currency, and I trust it but the 50% drop in its value was unpleasant, especially for pensioners.”
Most people that the Bulletin’s correspondent in Almaty spoke to agreed, and it will be a relief to President Nursultan Nazarbayev and the Kazakh government that confidence in the tenge is returning after a torrid 2015.
There were some who took a more cautious approach, though.
“Nowadays the position of the tenge is unsteady and it may weaken again. If I had to choose between tenge and dollar to put money in deposit, I’d probably choose dollar,” said Aigerim, a music teacher.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 275, published on April 8 2016)
MARCH 30 2016 (The Conway Bulletin) – The Armenian Central Bank said it cut interest rates by a quarter of a percentage point to 8.25%, just over a month after the previous rate cut. The Bank said this is in line with the policy of easing the cost of borrowing and other monetary instruments. Economic activity in the country is shrinking and the Central Bank wants to boost it gradually by cutting rates.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 274, published on April 1 2016)
MARCH 29 2016 (The Conway Bulletin) – Kyrgyzstan’s Central Bank cut interest rates on Tuesday by two percentage points to 8%, in an effort to boost the domestic economy, official media said. At the beginning of March, Central Bank chief Tolkunbek Abdygulov had said interest rates would have remained steady at 10%.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 274, published on April 1 2016)
MARCH 31 2016 (The Conway Bulletin) – Imports of polyethylene, used to produce plastics, into Kazakhstan fell by 48% to 12,500 tonnes in January-February 2016 compared to the same period last year, MRC, a consulting company, said in a report. According to the report, imports in February stood at a similar level to last year. The fall may also be another indication of the worsening economic downturn.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 274, published on April 1 2016)
MARCH 29 2016 (The Conway Bulletin) – Guernsey-based Tethys Petroleum said its losses more than quadrupled in 2015 compared to the previous year, mostly due to the depreciation of some of its Kazakh assets. Tethys lost $74.6m in 2015. According to the company’s yearly report, the tenge depreciation also dented revenues. The tenge lost around half its value against the US dollar in 2015.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 274, published on April 1 2016)
APRIL 1 2016 (The Conway Bulletin) – Over-reliance on US dollars as a benchmark for prices of luxury items and, most importantly, as a currency in which savings are held, is a common affliction for the economies of South Caucasus and Central Asia.
This week Georgia’s Statistics Committee said US dollar-denominated deposits make up more than two-thirds of the total held at commercial banks. This is the highest level in the past five years.
Central bankers in other countries, however, boasted the public’s growing confidence in their local currencies but this is, frankly, coming from a very low base. And who really has much confidence in a currency such as the tenge right now? It lost around half its value last year. As did the Azerbaijani manat.
The vulnerability of these currencies and the inability of the Central Banks to protect their values show just why ordinary people turn to the trusty Greenback for their savings.
Despite whimpering from Central Bankers that confidence is returning in their currencies, the US dollar will remain the currency of choice.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(Editorial from Issue No. 274, published on April 1 2016)
