Foreign Exchange Market 

(June 2009) 

In the foreign exchange market of the republic, the activity of its participants considerably increased in comparison with the previous month, which was provided by the increased number of transactions of banks for maintenance of their clients settlements on export-import transactions. At that the increase in the number of transactions was registered in the sector of conversion transactions and conversion of currency into cash as well as in the article “Others”. Net runoff of cashless USD in the analyzed period was noted for transactions on monetization and allocation of deposits in other banks, whereas net inflow was noted for transactions on monetization, money transfers and other receipts without opening of an account, receipts of deposits from other banks and clients.  

At the beginning of the month there was USD exchange rate increase, which was provided by the increase demand for currency on the part of several commercial banks as a result of their expenses growth for payment of import contracts with clients. The National Bank of the Kyrgyz Republic in order to smooth acute fluctuations of the national currency exchange rate at that period sold cashless USD in the foreign exchange market. Hereafter until the middle of June, the USD exchange rate remained stable and in the second half of the month the USD exchange rate decreased under the influence of the increased currency surplus in commercial banks in the conditions of seasonal inflow of foreign currency. Under these conditions the National Bank of the Kyrgyz Republic purchased the USD in the foreign exchange market. Only in the last day of the month, there was certain decrease in the USD exchange rate. In general within the month, the weighted average USD rate in the inter-bank foreign exchange market increased by 0.1 percent and constituted 43.2988 KGS/USD as of the end of the month, whereas the USD discount rate increased by 0.1 percent and constituted 43.2810 KGS/USD 

The overall transactions volume on USD sale/purchase in the foreign exchange markets increased by 2.2 percent in comparison with the previous month and constituted 54.7 million US dollars. The volume of transactions of the National Bank of the Kyrgyz Republic on USD purchase-sale constituted 12.7 million USD (the volume of transactions of USD purchase constituted 7.7 million USD, on USD sale – 5.0 million USD). The volume of transactions of commercial banks on USD sale/purchase in the foreign exchange markets increased by 65.9 percent and constituted 42.1 million USD.  

The dynamics of the USD exchange rate in exchange offices was similar to USD rate in the interbank foreign exchange market. In general within the month, the weighted average USD selling rate in exchange offices was left unchanged and constituted 43.2297 KGS/USD as of the end of June. In general within the month the USD selling rate in the exchange offices was 0.05 soms higher than the weighted average rate in the foreign exchange market.  

In June, the EUR exchange rate in exchange offices was formed under the influence of the balance dynamics of EUR-USD in the world markets and dynamics of USD exchange rate in the domestic market. In the first decade of the month after short-term growth at the beginning of the month, the EUR exchange rate was mainly decreasing, and in the remaining part of the month it was fluctuating in narrow range. In general within the month, the weighted average rate of EUR selling rate in exchange offices increased by 0.6 percent and constituted 60.4547 KGS/EUR by the end of the month.  

The RUB exchange rate in the currency exchange offices was also formed under its dynamics against USD in the external markets. During June, the RUB exchange rate was mainly decreasing. In general, the monthly weighted average RUB selling rate in exchange offices decreased by 0.7 percent and constituted 1.3802 KGS/RUB by the end of the reporting period.  

The KZT exchange rate dynamics in exchange offices within the month was fluctuating in a narrow range. In general, the monthly weighted average KZT selling rate in exchange offices was left unchanged and constituted 0.2866 KGS/KZT by the end of the month. 

The overall volume of currency buying/selling transactions in currency exchange offices in June increase by 30.7 percent in comparison with May and constituted 3109.3 million soms. Herewith there was an increase in the volume of transactions on all types of currencies. The share of transactions with USD constituted 65.1 percent, with EUR – 9.3 percent, with RUB –16.2 percent, with KZT – 8.0 percent, and the share of transactions with other currencies constituted 1.3 percent.