«April was marked for the countries of the Eurasian Economic Union by a significant increase in volatility in the financial markets after a long period of stabilization of nominal exchange rates,» the Eurasian Development Bank’s (EDB) monthly macroeconomic report notes.
A new round of sanctions against Russia has become a detonator of the volatility growth. This led to the depreciation of the ruble and the subsequent weakening of other currencies in the region, including the Kazakh tenge.
At the same time, the Russian ruble showed the largest increase in volatility, which fell by more than 10 percent against the US dollar.
«As the experience of the last three or four years has shown, the weakening of the national currency is a risk factor for investment growth and inflation control. At the same time, amid the weakening of the national currency rates, the dynamics of inflation in a number of countries of the EDB has rebounded from its historical minimum or suspended further decline,» said EDB Chief Economist Yaroslav Lissovolik.
As for Kyrgyzstan, in April 2018, against the background of increased volatility in the regional financial markets, the som strengthening tendency was interrupted. To smooth out the sharp fluctuations in the exchange rate, the National Bank of Kyrgyzstan conducted currency interventions. The net sale of foreign currency for April 2018 was $ 8.2 million.
«As a result, the domestic foreign exchange market remained stable, and external shocks had a short-term and very limited impact on key macroeconomic indicators,» the report said.
Experts forecast that in April-May 2018, the slowdown in economic growth will continue. This is mainly due to the reduction in production at Kumtor mine. On the other hand, in March 2018, the credit impulse began to support the economy through the growth in loans for the construction and consumer sectors. A stable freight turnover growth trend also gives reason to believe that business activity in other sectors of the economy will be strengthened.