Major Trends of Financial Market
(June 2009)
In June the situation in the financial market was formed under conditions of the maintained high level of excess reserves in the banking system and decrease in the inflation level that positively influenced on further improvement of conjuncture and decrease in interest rates in all segments of the market.
On the primary STB market in June, the Ministry of Finance increased the volume of 12-month STB supply, leaving supply volumes of 3- and 6-months STB at the same level. At the same time the demand for state treasury bills considerably increased and within the month it exceeded the supply rate; as a result the STB profitability rate decreased in all segments of the market. In general the overall profitability rate of STB decreased by 1.0 percentage point and reached 16.8 percent. The average weekly demand increased by 70.1 percent and constituted 349.6 million soms whereas the weekly average volume of sales increased by 72.5 percent to 125.9 million soms.
The National Bank of the Kyrgyz Republic under conditions of high level of excess reserves in the baking system increased the volume of NBKR notes emission. At that the demand of commercial banks for notes was left unchanged at the level of the previous month whereas the demand on the part of institutional investors considerably decreased. However the number of commercial banks – participants of the market increased, which, in the conditions of low inflation rate, promoted competition growth and further decrease of notes profitability rate. As a result the weekly average volume of the filed applications of the NBKR notes acquisition increased by 13.0 percent in comparison with the previous month (May) and constituted 520.3 million soms, whereas the weekly average sales volume decreased by 1.5 percent and constituted 447.3 million soms. The weighted average profitability rate on all types of the NBKR notes decreased by 1.3 percentage points and constituted 7.3 percent.
In the market of inter-bank credits, the demand for borrowed resources considerably increased due to fluctuations of liquidity in individual commercial banks. At the same time the demand level was maintained by rather high supply rate in the market, as a result the interest rates were decreased. The volume of KGS borrowing in the inter-bank market of credit resources constituted 743.6 million soms, having exceeded the rate of the previous month by 36.1 percent.
Increase in the volume of transactions was registered in the segment of REPO-transactions by 25.2 percent up to 533.6 million soms and in the segment of credit transactions by 75.0 up to 210.0 million soms. At that the weighted average interest rate on REPO-transactions decreased by 2.0 percentage points and constituted 7.2 percent whereas on credits in the national currency – by 0.4 percentage points to 7.5 percent.
In June, on the foreign exchange market the situation was rather stable, the USD exchange rate was fluctuating in narrow range. The National Bank of the Kyrgyz Republic in order to smooth acute fluctuations of the national currency exchange rate at the beginning of the month acted in the market as a USD seller and in the second half of the month – as USD purchaser. In general the weighted average USD exchange rate in the interbank foreign exchange market increased by 0.1 percent and constituted 43.2988 KGS/USD and the USD discount rate also increased by 0.1 percent and constituted 43.2810 KGS/USD. KGS exchange rate changes were inconsiderable against other major currencies: within the month the weighted average EUR selling rate increased by 0.6 percent in the exchange offices to 60.4547 KGS/EUR by the end of June, RUB selling rate decreased by 0.7 percent and constituted 1.3802 KGS/RUB, KZT selling rate was left unchanged at the level of the previous month and constituted 0.2866 KGS/KZT.
The National Bank of the Kyrgyz Republic in June did not perform tenders on STB sale on REPO-terms. Commercial banks did not allocate funds on the NBKR fixed-term deposit accounts.
