The Board of the National Bank of Kyrgyzstan decided to raise the discount (key) rate by 400 basis points — up to 14 percent at its unscheduled meeting. Official website of the bank says.
The National Bank noted that exchange rate volatility is observed in the domestic foreign exchange market, which is caused by fundamental factors due to the sanctions imposed on the Russian Federation. The exchange rate of the Russian ruble grew to 116-120 rubles for 1 U.S. dollar.
«Taking into account close economic ties of Kyrgyzstan with the main partner countries through mutual trade and remittances, as well as growing uncertainty in the external environment, the pressure on the foreign exchange market of our country persists,» the statement says.
The National Bank of the Kyrgyz Republic closely monitors the evolving situation in the external environment and in the domestic foreign exchange market and, if necessary, takes appropriate measures. To smooth out sharp fluctuations in the exchange rate, it conducts foreign exchange interventions to sell foreign currency and uses all the necessary regulatory tools.
The National Bank maintains its presence in the country’s foreign exchange market and has sufficient resources.
The volume of gold and foreign exchange reserves of the National Bank as of March 7 amounted to more than $2.7 billion (about six months of imports).
«Taking into account the development of the external environment and internal economic conditions, the National Bank decided to increase the discount rate to 14 percent. This decision was made in order to minimize the negative effect of external shocks on the current inflation dynamics in the Kyrgyz Republic. In case of any risks, the National Bank does not exclude the possibility of making additional adjustments to the ongoing monetary policy. The National Bank of the Kyrgyz Republic regularly assesses external and internal factors influencing inflation and, depending on the economic situation, will take appropriate monetary policy measures,» the statement says.
The next scheduled meeting of the Board of the National Bank on the issue of the discount rate will be held on April 25. Depending on the situation, it will hold an unscheduled meeting on size of the key rate.
The National Bank has already raised the discount rate from 8.5 to 10 percent 10 days ago.
