Tajikistan's central bank raised its benchmark refinancing rate by a further 350 basis points to 16.0 percent to reduce the potential risk of higher inflation, curb the depreciation of the national currency, lower the level of U.S. dollars used in the economy and maintain economic stability.
The National Bank of Tajikistan has now raised its rate 500 basis points this year following a 150-point hike in February as the somoni has continued to drop.
Last year the national bank raised its rate 300 points between April and July for a total increase of its benchmark rate of 800 points - a doubling of rates - from the start of 2016 until now.
In a statement from March 20, the central bank also raised the ratio of required reserves in somoni deposits by 150 basis points to 3.0 percent and the ratio on foreign currency deposits by 200 points to 9.0 percent.
To ease the negative impact on the amount of cash in circulation, the central bank established a 6-month refinancing rate of plus 2 percentage points and said it would establish a benchmark interest rate based on interbank rates.
The somoni has been declining this year and was trading at 8.14 to the U.S. dollar today, down 3.2 percent this year while inflation eased to 5.3 percent in January from 6.1 percent in December.
Last year Tajikistan's finance ministry forecast the somoni would depreciate in coming years to average of 9.6 in 2017, 10.4 in 2018 and 11.2 in 2019 with inflation at 7 percent in those years.
In March 2016 Russia's central bank said the amount of money transferred to Tajikistan had fallen to $1.28 billion in 2015 from $3.8 billion in 2014 and $4.16 billion in 2013.
Just as some of the other former Soviet republics, Tajikistan has been hit hard by Russia's economic crises and remittances have fallen sharply.
There have been reports of liquidity shortage in Tajikistan's banking system and the country's government is in talks with the International Monetary Fund (IMF) and other international lenders about financial assistance.