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National Bank believes: increase in demand for U.S. dollar is temporary

The National Bank of Kyrgyzstan considers the increased demand for the U.S. dollar in recent days as a temporary phenomenon. The press service of the National Bank of the Kyrgyz Republic informed 24.kg news agency.

According to it, from August 10 to August 15, the official exchange rate of the U.S. dollar to the Kyrgyz som increased by 1.6 percent — from 68,1864 to 69.25 soms. This is caused by an unfavorable external background, in particular, new sanctions against Russia had their effect. In addition, there is a strengthening of the US dollar’s position in the world market.

«This is temporary phenomenon, but in the end it led to a short-term increase in demand for the foreign currency,» the National Bank explained.

The situation on the foreign exchange market is relatively stable. Since the beginning of the year to August 15, the official exchange rate of the U.S. dollar to som increased by 0.6 percent — from 68,8395 to 69.25 soms.

The National Bank stressed that a floating exchange rate regime was in force in Kyrgyzstan. This implies that market exchange rates are freely negotiated between the seller and the buyer. Volatility of the exchange rate is a natural phenomenon in the countries with the floating exchange rate regime and it does not always require an intervention of the National Bank. The exchange rate can either rise or fall.

The National Bank can smooth the sharp fluctuations in the U.S. dollar exchange rate to som, but not change the steady trend of the exchange rate decline or growth.

«The National Bank constantly monitors the situation in the domestic foreign exchange and foreign financial markets and, if necessary, carries out interventions to smooth the sharp fluctuations of the exchange rate in accordance with the monetary policy. The population of Kyrgyzstan should not give in to panic,» the National Bank stressed.