Kyrgyz central bank continuing to prop up national currency

By bne IntelliNews January 6, 2016

The National Bank of Kyrgyzstan carried out fresh interventions in the currency market on January 4 and 5 to stabilise the exchange rate of the som, the central bank’s latest figures show. The bank spent $9.1mn on January 4 and $3.25mn on January 5.

The country’s national currency has been on a rollercoaster throughout 2015, depreciating by 28.87% y/y against the greenback at the end of the year. The currency weakened due to a combination of factors including an economic slowdown in Russia, which stands as the country’s second largest trade partner after China, and an overall strengthening of the dollar in the global currency market. In response, the central bank sold $330.5mn on propping up the som in 2015 and $536.7mn in 2014, according to the bank’s figures. The som touched a historic low in November, when it fell to KGS75.9 to the dollar on November 28. The bank’s numerous interventions kept the som fluctuating between KGS75.84 and KGS75.9 to the dollar throughout December and the first week of January.

The bank’s interventions in 2015 feature among the factors that eroded the country’s gross foreign reserves by 11.72% y/y to $1,739.6mn between January and November alone.

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