Major Trends in the Financial Market  

(September 2009) 

In September, with the remaining high liquidity level in the banking system there was the demand decrease for the borrowed KGS resources on the monetary market and the demand increase for the government securities. This promoted decrease in interest rates in all segments of the financial market. Since September 2008, on the foreign exchange market there has been decrease in the USD exchange rate.  

Within the reporting month, the overall volume of loans in the national currency amounted to KGS 555.6 million soms in the inter-bank credit resources market, this amount decreased by 19.7 percent. The decrease occurred in the segment of REPO transactions by 19.3 percent and constituted KGS 530.6 million soms, whereas, the volume of credit transactions decreased by 27.5 percent and amounted to KGS 25.0 million soms. The weighted average interest rate on the REPO transactions decreased by 1.6 percentage points and constituted 4.1 percent and the rate on credits in the national currency decreased by 1.5 percentage points and constituted 3.8 percent. 

On the primary STB market, the Ministry of Finance reduced the volume of the proposed emission for the STB. At the same time the demand for STB exceeded the supply level; this provided the decrease in profitability in all STB market segments. In general the weekly demand volume decreased by 38.4 percent and constituted 189.2 million soms whereas the average weekly sales volume of STB decreased by 15.6 percent and constituted 84.4 million soms. The general level of the STB profitability rate decreased by 3.0 percentage points and constituted 5.3 percent. 

In September, the National Bank of the Kyrgyz Republic, in the conditions of the inflation rates decline, decreased the monthly supply level of the NBKR notes. At that the demand on the part of investors also decreased slightly. In general within the month the weighted average profitability rate of the NBKR notes decreased by 1.3 percentage points and constituted 3.3 percent. In the reporting period, the weekly average sales volume decreased by 25.5 percent in comparison with the previous month and constituted 355.3 million soms and the weekly demand volume constituted about 542.7 million soms, having decreased by 27.3 percent. 

In the second half of the reporting month, the tendency for the USD descent against the major world currencies on the external markets and the increase in the currency supply in the internal foreign exchange market on the part of individual commercial banks affected the USD exchange rate decrease. In order to prevent acute fluctuations of the national currency exchange rate, the National Bank of the Kyrgyz Republic participated in the market as a seller and buyer of cashless USD. In general within the month the weighted average USD exchange rate in the inter-bank foreign exchange markets decreased by 1.2 percent and constituted 43.5597 KGS/USD by the end of the reporting month, whereas the USD discount rate also decreased by 0.1 percent and constituted 43.6293 KGS/USD. In foreign exchange offices the weighted average USD selling rate decreased by 1.4 percent and constituted 43.4804 KGS/USD by the end of the reporting month. 

In September the national currency weakened against EUR and RUB: within the month the weighted average EUR selling rate in exchange offices increased by 2.1 percent and constituted 63.9795 KGS/EUR, and the RUB selling rate increased by 4.3 percent up to 1.4345 KGS/RUB by the end of the reporting month. The KZT rate decreased by 1.3 percent and constituted 0.2876 KGS/KZT by the end of the reporting month.  

The National Bank of the Kyrgyz Republic in September did not perform tenders on STB sale on REPO-terms. Commercial banks did not allocate funds on the NBKR fixed-term deposit accounts.