Monday, November 30, 2015

Kyrgyzstan holds rate, to intervene more in FX if needed

    The central bank of Kyrgyzstan kept its policy rate steady at 10.0 percent and said it was monitoring the situation on the domestic currency markets and would continue to intervene in the foreign exchange market if necessary to smooth out sharp fluctuations.
     The comment by the National Bank of the Kyrgyz Republic about interventions is new compared with last month, reflecting a continued depreciation of the som currency this year.
     The som started depreciating against the U.S. dollar in June and after a brief rebound in August it has dropped further. On Friday it fell to a low of 75.9 to the dollar but was slightly firmer at 73.4 today though still down 19.7 percent this year.
     The central bank is one of six central banks worldwide that have both raised and lowered rates this year, mainly in response to movements in the exchange rate and thus inflation. Kyrgyzstan's central bank has cut its rate by a net 50 basis points this year.
     The economy of the Kyrgyz Republic, which borders China to the south and Kazakhstan to the north, is continuing to expand with growth of 4.8 percent in the first 10 months of the, driven by increasing output from the Kumtor gold mine. Excluding Kumtor, Gross Domestic Product rose by 4.0 percent, the central bank said.
    Kyrgyzstan's inflation rate eased to 4.9 percent in October from 6.4 percent in September and then to 3.6 percent as of November 20, the bank said, mainly due to low growth in food prices and a fall in  fuel prices.



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