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Fall of dollar rate in Kyrgyzstan – seasonal phenomenon

The current fall of US dollar exchange rate in Kyrgyzstan is connected with internal seasonal factors. At this time of year, the number of remittances is increasing, the management of the monetary operations of the National Bank commented 24.kg news agency on the situation on the currency market of the country.

It is noted that now situation with the prevalence of foreign currency supply over its demand on the market is relatively stable. The increase in supply is explained by an external favorable background and internal seasonal factors. As a result, this led to a short-term volatility of the exchange rate.

From the beginning of 2017 to April 22, the official exchange rate of the US dollar to KGS decreased by 2.5 percent — from 69,2301 to 67,4719 soms.

To ease the sharp fluctuations in the exchange rate and stabilize the situation on the currency market on April 18 and 21, 2017, the National Bank conducted operations on purchasing foreign currency for $ 12.65 million. At the same time, the net sale of dollars since the beginning of the year has formed in the amount of $ 5 million.

At the same time, the NBKR emphasizes that before talking about the impact of the dollar on the economy, we must pay attention to its structure. Kyrgyzstan is a net importer country. That is, we import more than we export, and trade balance indicators are negative.

«If the trend of US the dollar exchange rate weakening continues, this primarily can lead to an improvement in the purchasing power of the population and the state budget due to a reduction in the cost of servicing the public debt. In the long term, the weakening of the US dollar exchange rate may worsen the terms of foreign trade and reduce the competitiveness of local producers in foreign markets given that the national currencies of Kyrgyzstan's trading partners will weaken," the National Bank commented.

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