Foreign Exchange Market  

(March 2008) 

During the first twenty days of March, the USD kept on strengthening in the foreign exchange market due to the continuously growing demand for foreign currency on the part of some commercial banks due to the payment of clients’ importation contracts. The USD exchange rate started going down only during the last ten days of the month due to the increase of foreign currency supply in the foreign exchange market. To smooth down the violent fluctuations of the exchange rate during the reporting month, the National Bank has conducted transactions on USD sale at the foreign exchange auctions. 

The weighted average USD exchange rate in the inter-bank foreign exchange auctions has increased by 0.1 per cent and amounted to 36.4131 KGS/USD as of the end of the month. The USD accounting rate has increased by 0.2 per cent and reached 36.4091 KGS/USD. 

The total volume of transactions on USD purchase and sales in the foreign exchange auctions in March has decreased compared to the previous month by 18.2 per cent and amounted to USD 49.6 million. The majority of transactions have been made between commercial banks (69.8 per cent of the total volume of transactions); their volume has increased by 30.9 per cent. The volume of the National Bank transactions on USD sale has decreased  

The total volume of transactions on USD purchase and sales in the foreign exchange auctions in March has decreased compared to the previous month by 18.2 per cent and amounted to USD 49.6 million. The majority of transactions have been made between commercial banks (69.8 per cent of the total volume of transactions); their volume has increased by 30.9 per cent. The volume of the National Bank transactions on USD sale has decreased during the reporting month by 56.1 per cent down to USD 15 million. In addition, in March the NBKR conducted transactions on RUB purchase; their volume was equal to RUB 11.5 million.  

The USD exchange rate in exchange offices has mainly been increasing during the first twenty days of March, and during the last week of the month it has been decreasing. Over the month, the average weighted USD selling rate in exchange offices has gone down by 0.5 per cent, having made 36.2386 KGS/USD. The average monthly USD selling rate in exchange offices was at the level of the weighted average rate in the inter-bank foreign exchange auctions. The daily average fluctuation of USD selling rate in exchange offices has increased from 0.08 per cent to 0.09 per cent, and the average margin on USD buying/selling transactions has reduced from 0.36 to 0.30 per cent. 

The EUR exchange rate dynamics in the currency exchange offices is, as usual, formed under the influence of its variations at the external markets, as well as due to the changes of KGS exchange rate against USD in the domestic market. The tendency of EUR exchange rate increase has prevailed in the first half of the month, then its short-term decrease was observed, and later on it has increased again. The monthly weighted average EUR selling rate in exchange offices has increased by 3.8 per cent and amounted to 57.3084 KGS/EUR as of the end of the month. The daily average fluctuation of EUR selling rate has increased within the reporting month from 0.14 to 0.35 per cent, and the average margin on buying/selling transactions has increased from 0.43 per cent to 0.52 per cent. 

The dynamics of RUB exchange rate in currency exchange offices was similar to the dynamics of EUR exchange rate: during the month it was mainly increasing, and only in the last ten days of March there was a short-term decrease. Over the month, the weighted average selling rate of RUB has increased by 2.5 per cent up to 1.5443 KGS/RUB as of the end of the month. The daily average fluctuation of RUB selling rate has increased from 0.15 per cent to 0.16 per cent, and the average margin has increased from 0.63 per cent to 0.73 per cent. 

The KZT exchange rate in currency exchange offices has been fluctuating during the month within the range of 0.300-0.304 KGS/KZT. During the month, the average weighted KZT selling rate in exchange offices has decreased by 0.4 per cent and amounted to 0.3002 KGS/KZT as of the end of the reporting month. The daily average fluctuation of KZT exchange rate has increased from 0.12 to 0.15 per cent, and the average margin has reduced from 0.79 per cent to 0.73 per cent. 

The total volume of currency buying/selling transactions in currency exchange offices in the reporting month has increased by 2.3 per cent and amounted to KGS 2,132.8 million. The increase of transactions occurred in all currencies except for transactions with KZT. The shares of transactions with USD and KZT went down to 64.5 per cent and 10.6 per cent, accordingly, and the shares of transactions with EUR and RUB have increased up to 10.8 per cent and 13.8 per cent, accordingly. The share of transactions with other currencies has grown from 0.3 per cent to 0.4 per cent. 

The index of real effective exchange rate in the reporting month constituted 101.1, having decreased by 0.2, as compared to February. The RUB real bilateral exchange rate has also decreased to 71.31, and KZT real bilateral exchange rate has increased by 1.4 compared to the previous month up to 97.73. Such a dynamics of real exchange rates indicates that, on the whole, the competitive power of Kyrgyz goods in external markets has improved in March.