The exchange rate of the U.S. dollar to som was relatively stable last year. Experts predict a similar situation for 2022, but business is waiting for an appreciation of the U.S. currency. At the same time, a slight strengthening of the Russian ruble, but weakening of the Kazakh tenge is expected.
24.kg news agency collected opinions of local, Russian and foreign analysts on the exchange rate of the American currency this year.
What will be the rate of dollar tomorrow?
The Eurasian Development Bank has made a forecast for the development of Kyrgyz economy in 2022. In the baseline scenario, the current approaches to monetary policy are expected to remain in the medium term. The monetary authorities will continue to intervene in the foreign exchange market to prevent sharp fluctuations.
We expect that the exchange rate of the Kyrgyz som in 2022 will range between 84-86 soms per $1.
Aigul Berdigulova, a Senior Analyst at the Country Analysis Center of the Eurasian Development Bank
The risk for exchange rate dynamics is the probability of accelerated normalization of the monetary policy in developed countries, first of all, in the USA.
Local business has a different opinion. Entrepreneurs are more pessimistic.
Business in Kyrgyzstan does not rule out a growth of the dollar exchange rate to 100-150 soms.
«The large volumes of interventions by the National Bank are alarming. If you look at how much we spend on them, there are assumptions about the growth of the dollar rate in 2022. It’s likely to be smooth, of course. But the prices of all goods will go up, because Kyrgyzstan imports most of them,» Gulnara Uskenbayeva, the head of the Association of Suppliers, said.
What the National Bank has to say
The National Bank of Kyrgyzstan noted that the overall situation in the foreign exchange market of Kyrgyzstan for most of 2021 was characterized as stable. But at the end of the third quarter, there was an excess of demand for foreign currency over available supply in the domestic foreign exchange market.
The National Bank, following the floating exchange rate regime, participated in the foreign exchange trading to prevent sharp fluctuations in the exchange rate.
The National Bank reminded that they don’t make any forecasts on the exchange rate. After all, the dynamics depends on the supply and demand of foreign currency at any given time. It is formed against the background of external and internal factors.
«In addition, the dynamics of the exchange rate also depends on the balance of payments indicators in terms of export-import operations, expectations of the population regarding the prospects for the national currency, an increase/decrease in the foreign currency inflow into the country from investors, migrants, the impact of seasonal factors,» the National Bank concluded.
What will be the ruble exchange rate?
In addition to the U.S. dollar rate, one should pay attention to the forecasts for the exchange rates of the national currencies of the nearest neighbors — Russia and Kazakhstan. Kyrgyzstan has the largest volume of trade exactly with these countries.
The situation in the currency markets of Russia and Kazakhstan may also affect the exchange rate of the Kyrgyz som.
Experts noted that as the sanctions risks weaken and the macroeconomic indicators continue to strengthen, there is a high probability of a significant strengthening of the ruble. The exchange rate of 65-70 rubles per $1 can be considered fundamentally justified.
Georgy Vashchenko, head of trading operations department on the Russian stock market at Freedom Finance, agrees with this forecast. He noted that the dollar/ruble pair did not demonstrate any serious volatility in 2021. There is reason to believe that the calm dynamics will persist in 2022.
«Quiet dynamics is expected next year, if there are no external shocks. The basic forecast: a corridor of 65-75 rubles per $1,» the expert concluded.
Experts attribute the aggravation of the geopolitical situation and new strains of coronavirus to shocks and possible risks.
The monetary policy of developed countries will be an important factor influencing the Russian currency. In November, the U.S. Federal Reserve kept the interest rate at the level of 0-0.25 percent per annum and announced scrapping of its anti-crisis asset purchase program.
Central banks are expected to move to further tighten monetary policy in 2022. This may trigger capital outflows from emerging markets and put pressure on the ruble.
Another factor on which monetary policy depends is the pandemic. If the situation develops negatively, it could provoke a surge in inflation and weak economic growth. New waves of the coronavirus may have a negative impact on the market sentiment and push up the dollar.
What about tenge?
Tenge will weaken compared to the dollar in 2022. This is the opinion of experts of Kazakhstan’s Institute for Strategic Research, the Association of Financiers of the Republic of Kazakhstan, the Eurasian Development Bank and the Applied Economics Research Centre (AERC).
According to the results of the December survey of the Association of Financiers of Kazakhstan, the U.S. dollar in 2022 could rise in value to 445.9 tenge.
The Association does not exclude that the expectations for the exchange rate of the national currency will be revised in the next survey towards an improvement against the incoming data on a milder form of the new strain of COVID-19, reduction of sanctions risks against Russia.
According to Aigul Berdigulova, a Senior Analyst at the Country Analysis Center of the Eurasian Development Bank, the tenge will be supported in 2022 by comfortable global oil prices for Kazakhstan, as well as high interest rates on financial assets denominated in the national currency.
«On the other hand, the global strengthening of the dollar will become a key factor in the weakening of the tenge,» Aigul Berdigulova concluded.
