Major Trends in Financial Markets
(February 2008)
In February, high liquidity level has been retained in the banking system in spite of a certain reduction. This has primarily affected the decrease of transactions volume in the inter-bank credit resources market. Thus, the volume of credits in the national currency has decreased by 27.0 percent and amounted to KGS 140.0 Million. REPO transactions haven’t been made during the reporting month. The volume of credit transactions in the national currency has increased by 38.1 percent up to KGS 140.0 Million, and the weighted average interest rate on them made 7.1 percent, having reduced by 1.0 pp.
The demand in the primary STB market has practically remained at the same level in February, but the Ministry of Finance has increased the volumes of treasury bills emission during the reporting month. The average weekly volume of the demand for STB has increased compared to the previous month by 1.9 percent up to KGS 51.6 Million, and the average weekly volume of sales has grown by 44.7 percent and reached KGS 31.8 Million. As a result, the STB yield has increased in all market segments. The weighted average yield of all types of STB has amounted to 9.6 percent over the month, having grown by 0.2 pp.
A certain decrease in the demand could be observed at the primary market of the NBKR notes; alongside with this the supply volume has also slightly reduced. The average weekly volume of submitted purchase applications for the NBKR notes in February has amounted to KGS 497.5 Million, having decreased by 8.6 percent, and the average volume of sales went down by 6.9 percent and constituted KGS 293.3 Million. The average monthly yield of all types of notes in the reporting month has reached 7.5 percent, having decreased by 0.8 pp. The yield decrease was observed for all types of notes: the yield of 14-day NBKR notes has reduced by 1.2 pp down to 6.8 percent, the 28-day notes yield has decreased by 0.5 pp up to 8.0 percent, the yield of 91-day notes has gone down by 0.8 pp, reaching 8.9 percent, and the yield of 182-day NBKR notes made 10.5 percent.
In February, the USD exchange rate in the foreign exchange market has been increasing, which was conditioned by the demand growth for foreign currency on the part of some commercial banks for financing clients’ importation contract payments. In order to smooth down the KGS exchange rate violent fluctuations, during the reporting month the National Bank conducted USD sales transactions for the amount of USD 34.2 Million. The weighted average USD exchange rate in the inter-bank foreign exchange auctions has increased by 0.7 percent over the month and amounted to 36.3915 KGS/USD as of the end of February. The discount rate of the US currency has increased by 0.6 percent and reached 36.3299 KGS/USD. The weighted average USD selling rate in the exchange offices has amounted to 36.4274 KGS/USD, having increased by 0.8 percent.
During the reporting month, the Kyrgyz som has also depreciated against other major currencies. Thus, the weighted average selling rate of EUR against KGS in the exchange offices has increased by 3.3 percent, the RUB selling rate has increased by 2.6 percent and the KZT selling rate has gone up by 0.3 percent.
In order to withdraw the excessive liquidity from the banking system, the National Bank has also conducted STB(s) sales auctions on REPO terms. In February, based on the results of these auctions, reverse REPO agreements have been concluded with commercial banks for the amount of KGS 101.0 Million. The average monthly yield of these transactions amounted to 8.4 percent.
During the reporting month, commercial banks did not allocate funds on the NBKR fixed-term deposit accounts.
