Foreign Exchange Market  

(February 2007) 

The rise in the US dollar exchange rate was noted in the first week of February at the foreign exchange market. This was caused by the increase in demand for foreign currency on the part of individual commercial banks due to the increase of their expenses for the payment of the clients’ contracts on importing goods and services. Moreover, at the beginning of the month the amount of cash som in circulation notably increased (the growth was 2.3 per cent per week). At that period with the objective to iron out the violent fluctuations of the rate the National Bank performed operations on selling US dollars.  

However at a later stage the demand for foreign currency at the foreign exchange market decreased due to the reduction of the banks’ costs on the payment of clients’ import contracts while the receipts increased from exporting goods and services. As a result the supply of foreign currency exceeded the demand for it at the market, and the exchange rate of the US dollar was dropping. In addition, the drop in the US dollar exchange rate at the domestic market was to a certain extent affected by its weakening at the external markets in the second half of the month. In contexts of the changing market conditions the National Bank performed operations on purchasing the US dollars during the last week of the month.  

Overall for February the average weighted US dollar rate at the interbank foreign exchange auctions dropped by 1.1 per cent and was Som 38.306/US dollar as of month end. The dollar discount rate for the reporting month dropped by 0.6 per cent up to the level of Som 38.3907/US dollar.  

The total volume of operations at the foreign exchange auctions amounted to Som 20.3 million, having reduced by 11.3 per cent. The main part of transactions was concluded among commercial banks (72.5 per cent), the volume of which in the reporting month increased by 72.9 per cent and amounted to US$ 14.7 million. The volume of operations of the National Bank was US$ 5.6 million, having reduced by 61.1 per cent.  

The dollar rate in the exchange offices also after some increase at the beginning of the month later on was mainly dropping. Overall for February the selling rate for the dollar in the exchange offices dropped by 0.8 per cent to Som 38.3088/US dollar. Meanwhile, on the average for the month it was lower by Som 0.02 than the average weighted rate at the interbank foreign exchange auctions. The average daily deviation of the selling rate for dollar in exchange offices for the month remained at the level of 0.1 per cent, and the average margin on operations for buying/selling dollars decreased from 0.38 per cent to 0.32 per cent. 

The movement in the euro rate in the exchange offices mainly formed under the influence of its changes at the external markets. After minor fluctuations in the first half of the month its rate notably increased in the middle of February. However, soon the Euro rate stabilized and later on it was floating in the narrow band. Overall for the month the selling rate of Euro in the exchange offices increased by 0.9 per cent and was Som 50.6507/Euro. The average daily deviation of the selling rate for Euro dropped from 0.12 to 0.9 per cent per month, and the average margin on buying/selling transactions reduced from 0.44 to 0.39 per cent.  

The selling rate for the Russian Ruble in the exchange offices mainly increased in February. Overall for the month it increased by 1.2 per cent up to Som 1.4647/Ruble. The average daily deviation of the selling rate for the Russian Ruble decreased from 0.13 to 0.09 per cent in comparison with the prior month, and the average margin for the month decreased from 0.78 to 0.75 per cent.  

The selling rate for the Kazakh Tenge in the exchange offices was mainly increasing in the first half of the month, and it changed in the narrow band in the second half of the month. Overall for the month the selling rate for the Tenge in the exchange offices increased by 0.9 per cent and was Som 0.308/Tenge as of month end. Meanwhile, the average chain deviation of the Tenge rate dropped from 0.22 per cent to 0.16 per cent, and the average margin also decreased from 1.11 per cent to 0.64 per cent.  

The total volume of operations on buying and selling foreign currency in the exchange offices in February increased by 32.3 per cent and amounted to Som 2042.4 million. The volume of operations increased on all types of foreign exchange operations, however the growth rates in the volume of operations with the Russian Rubles, Kazakh Tenge and other currencies were considerably higher (by more than 2 times). As a result, the share of operations with Dollars in the total volume of operations reduced to 53.4 per cent, with Euro to 8.3 per cent, and with the Russian Rubles and Kazakh Tenge increased to 18.7 and 19.0 per cent, correspondingly. The share of operations with other foreign currencies also increased from 0.3 per cent to 0.5 per cent in the structure of foreign exchange operations.