Foreign Exchange Market  

(February 2008) 

During the reporting month the tendency of strengthening USD has prevailed in the domestic foreign exchange market, which was conditioned by the demand increase for the foreign exchange on the part of some commercial banks for financing the clients’ payment contracts for imported goods and services. To smooth down violent fluctuations of exchange rates, the National Bank conducted foreign exchange auctions for selling USD during the reporting month. 

The monthly weighted average USD exchange rate in the inter-bank foreign exchange auctions has increased by 0.7 percent and amounted to 36.3915 KGS/USD as of the end of the month. The USD official exchange rate has increased by 0.6 percent and has reached 36.3299 KGS/USD. 

The total volume of USD purchase/sales transactions at the foreign exchange auctions in February has increased by 4.4 percent and amounted to USD 60.7 Million. This increase has been conditioned by the increase of the National Bank transactions by 12.5 percent, which amounted to USD 34.2 Million, and in February the NBKR has only been selling this currency. The volume of inter-bank transactions at the foreign exchange auctions has amounted to USD 26.5 Million, having decreased by 4.4 percent. In addition, during the reporting month the National Bank conducted EUR sales at the foreign exchange auctions and the volume of these transactions amounted to EUR 0.4 Million.  

The dynamics of the USD exchange rate in exchange offices was similar to its dynamics at the foreign exchange auctions. In general the rate has been growing during the month; only at the end of the month a slight rate decrease has been observed. During the month, the weighted average USD selling rate in the exchange offices has increased by 0.8 percent, making 36.4274 KGS/USD as of the end of February. The average monthly USD exchange rate in the exchange offices was KGS 0.02 higher than the weighted average rate at the inter-bank foreign exchange auctions. The daily average fluctuation of USD selling rate in the exchange offices has remained at the level of 0.07 percent, and the average margin on USD buying/selling transactions has decreased from 0.41 to 0.36 percent.  

The EUR exchange rate dynamics in currency exchange offices, as usual, has been formed under the influence of its fluctuations in external markets, and of the changes of KGS/USD exchange rates in the domestic market. After a certain decline during the first week of February, the exchange rate started gradually increasing, and its growth rates have notably been higher during the last week of the month. The monthly weighted average EUR selling rate in the exchange offices has increased by 3.3 percent, amounting to 55.2273 KGS/EUR as of the end of the month. The daily average fluctuation of EUR selling rate during the reporting month has decreased from 0.24 to 0.14 percent, and the average margin on buying/selling transactions has reduced from 0.65 to 0.43 percent. 

The RUB exchange rate in currency exchange offices during the first week of February has been fluctuating within a narrow range, and then it started increasing. Generally for this month, the weighted average selling rate of RUB has increased by 2.6 percent, making 1.5065 KGS/RUB at the end of February. The daily average fluctuation of RUB selling rate has remained at the level of 0.15 percent, and the average margin has decreased from 0.83 to 0.63 percent. 

The KZT exchange rate in currency exchange offices has mainly been increasing during the month. In general during the month, the weighted average KZT selling rate in the exchange offices has increased by 0.3 percent and amounted to 0.3014 KGS/KZT as of the end of the reporting month. The daily average fluctuation of KZT exchange rate has decreased from 0.14 to 0.12 percent, and the average margin has decreased from 0.94 to 0.79 percent. 

The total volume of currency buying/selling transactions in currency exchange offices during the reporting month has increased by 19.8 percent and amounted to KGS 2,084.7 Million. The increase of transactions volume has been observed for all currencies. The share of transactions with USD went down to 64.8 percent, and the shares of transactions with EUR, RUB and KZT has increased to 10.4, 12.5 and 11.0 percent, accordingly. The share of transactions with other currencies has reduced to 0.3 percent. 

The index of the real effective exchange rate in February has decreased by 0.5 down to 101.3. At the same time, the RUB real bilateral exchange rate has dropped down to 72.65 against 73.08 in January, KZT real bilateral exchange rate has reduced from 96.92 to 96.33. Dynamics of real exchange rates indicates that in February the KGS depreciation against the major trading partners’ currencies has resulted in the improvement of trading conditions both in Russian and Kazakh markets, as well as in other external markets in general.