Major Trends of Financial Market
(February 2009)
In February, the decrease of liquidity level in the banking system was provided by demand increase for borrowed assets in the domestic inter-bank market of credit resources and demand decrease for government securities. The National Bank of the Kyrgyz Republic decreased the volume of NBKR notes supply whereas the Ministry of Finance increased the issuance volume of the State Treasury Bills. As a result there was an increase in rates for KGS borrowed assets and the STB profitability, whereas the NBKR notes profitability rate decreased.
In the inter-bank market of credit resources, the overall volume of transactions in the national currency constitutes 996.4 million soms, having increased by 52.0 percent in comparison with January. The increase occurred in the segment of the REPO-transactions and credit transactions. Thus in February, the volume of credit transactions increased in 2.8 times and constituted 395.0 million soms, the volume of REPO-transactions increased by 16.7 percent and amounted to 601.4 million soms. The weighted average rate on REPO-transactions within a month increased by 0.5 percentage points up to 14.8 percent, whereas the rate on credits in the national currency increased by 0.9 percentage points and amounted to 14.6 percent.
The Ministry of Finance in February increased the volume of bills emission whereas the demand for them on the part of commercial banks decreased. The average weekly STB sales volume increased by 19.6 percent and amounted to 96.1 million soms; the average weekly demand volume decreased by 16.9 percent and constituted 104.3 million soms. The weighted average profitability rate on all STB types increased by 0.2 percentage points and constituted 19.2 percent: including profitability rate of 3-month STB increased by 0.2 percentage points and amounted by 19.2 percent, of 6-month STB – by 0.1 percentage points up to 19.3 percent and 12-month STB – by 0.2 percentage points up to 19.9 percent.
On the primary STB market the average weekly demand volume on the part of investors decreased. The National Bank of the Kyrgyz Republic in the reporting month, decreased the NBKR notes supply volume, as a result that affected the decrease of their profitability rate. The weekly average volume of the filed applications for the NBKR notes decreased by 40.5 percent in comparison with the previous month and constituted 408.7 millions soms, whereas the weekly average sales volume decreased by 38.6 percent and constituted 258.6 million soms. The weighted average profitability rate for all types of the NBKR notes constituted 12.1 percent within a month, having decreased by 0.3 percentage points.
At the beginning of February, the National Bank of Kazakhstan performed the process of KZT one-stage devaluation that led to volatility growth on our domestic market. Thus the USD demand rate considerably increased, the EUR exchange rate increased and KZT sharply decreased. In such situation the National Bank of the Kyrgyz Republic in order to prevent acute fluctuations of the national currency exchange rate performed exchange market interventions, participating in the foreign exchange markets, selling US dollars, as a result of which the market situation became steady. Another factor, influencing the formation of KGZ in February was the reduction of foreign currency inflow to the domestic market due to decrease of earnings from export of goods and services as well as inter-bank deposits. In general within the month on the domestic foreign exchange market there was a growth of USD and EUR exchange rates as well as a considerable decrease of KZT rate. In February the weighted average USD exchange rate in the inter-bank foreign exchange markets increased by 2.1 percent and constituted 40.3500 KGS/USD by the end of the month, whereas the USD discount rate increased by 2.3 percent and constituted 41.1976 KGS/USD. In foreign exchange offices the weighted average USD selling rate increased by 1.8 percent and constituted 41.1655 KGS/USD by the end of February.
KGS rate decreased against RUB: within the month the weighted average RUB selling rate in exchange offices increased by 0.9 percent and constituted 1.1573 KGS/RUB as of the end of February. As for EUR and KZT, the national currency rate strengthened: the weighted average EUR exchange rate in exchange offices decreased by 0.5 percent and constituted 52.5361 KGS/EUR as of the end of the month and KZT – by 17.0 percent up to 0.2737 KGS/KZT.
The National Bank of the Kyrgyz Republic in February did not perform tenders on STB sale on REPO-terms. Commercial banks did not allocate funds on the NBKR fixed-term deposit accounts.
