Turkmen currency falls by quarter on black market

Turkmen currency falls by quarter on black market
By bne IntelliNews November 16, 2015

Turkmenistan’s national currency, the manat, has fallen by nearly a quarter to TMM4.2-4.5 against the dollar on the black market following a massive crackdown on currency dealers in markets throughout the country.

The official exchange rate set by the country’s central bank is TMM3.5 to the dollar. The manat was devalued from TMM2.85 to TMM3.5 in January, reflecting falling energy prices and export earnings.

The Chronicles of Turkmenistan website, run by exiled Turkmen opposition activists, reports that the law-enforcement agencies started cracking down on currency dealers at the beginning of November. As a result, the black-market exchange rate fell from TMM3.6 to the dollar to TMM4.2-4.5.

The black currency market started thriving in Turkmenistan after in mid-October the Turkmen central bank limited the sale of dollars to the population at $1,000 per person per purchase and $8,000 per person per year. In order to track the purchases of dollars banks make notes in citizens’ passports.

Turkmenistan’s next-door neighbour Uzbekistan also limits the sale of dollars to the population (at $2,000 per quarter) and businesses but it is almost impossible to buy dollars. As a result, this has created a thriving black market. On November 10, the Central Bank of Uzbekistan increased the official exchange rate of the sum by UZS14.46 to UZS2,706.59 to the dollar. Meanwhile, on the black market dollars are sold for UZS6,200 to the greenback and are bought at UZS6,100.

While the official rate of the sum remains stable devaluing by about 12% since the beginning of the year, the black market rate is more flexible in following market trends. Since the announcement of a free-floating exchange regime for the Kazakh tenge on August 20, the Uzbek sum lost around 30% of its value against the dollar. The tenge has since lost nearly 40% of its value.