Major trends of the financial market
(November 2009)
Reducing the level of liquidity in the system of commercial banks in the first half of November has influenced the changing dynamics of the yield of government securities and a slight increase in the cost of interbank credit resources. In November, a trend of stable reduced income of the yield of GS which began in March 2009 changed to the dynamics of oscillations of different directions and the yield on the basis of STbills months rose. At the same time at the interbank market of credit resources there is an increase of activity. The dynamics of the exchange market in November was characterized by high volatility.
The volume of transactions on the domestic interbank credit market in domestic currency grew four times, amounting to 1071.0 million soms where all operations were carried out under repo. The weighted average interest rate on repo transactions amounted to 3.1 per cent, slightly increased (by 0.1 percentage points).
Two auctions have been conducted in November and one additional placement of STbonds. Demand for STbonds from investors in comparison with October is declined but the number of investors is increased. This has led to some increase in competition in the market and reduce the yield by 0.2 percent amounting to 9.1 percent. In general, for the month, STbonds have been placed on totaling 131.2 million soms.
During this period the Ministry of Finance left the volumes of weekly placement of STbills at the same level. Demand for STbills has markedly decreased which resulted in increasing the yield of these securities (by 0.3 percentage points). Average weekly volume of demand for Treasury bills declined by 44.8 percent and average auction sales - by 3.5 percent.
In November the National Bank also did not change the amount of the weekly offerings of its notes while demand for them compared with October is significantly reduced and their profitability is slightly increased. Despite this the whole month an average yield for all types of notes fell by 0.8 percentage points. Average weekly sales as compared to October are decreased by 9.2 per cent and the volume of demand fell by 42.6 per cent.
An unsustainable dynamics of som exchange rate was marked during a month at the domestic foreign exchange market but November results indicated a decrease. To maintain the stability of national currency the National Bank conducted operations in the domestic interbank market selling and buying U.S. dollars. Thus, the average exchange rate of U.S. dollar in the interbank foreign exchange auction increased by 0.3 per cent and amounted to 43.9237 KGS/USD by the end of November, and the discount rate of U.S. dollar rose by 0.5 per cent and amounted to 43.9220 som/US dollar. Dynamics of the U.S. dollar in exchange offices for small oscillations was similar to its dynamics on the interbank foreign exchange market. By the end of November the weighted average selling rate of U.S. dollar rose by 0.3 percent, EUR – 1.1 percent, RUB - by 0.3 percent, KZT - by 1.8 per cent.
