Foreign Exchange Market  

(August 2008) 

On the foreign exchange market in August, there was kept a tendency of the national currency strengthening, under conditions of the surplus foreign currency supply mainly under the influence of money transfers and deposits from banks-nonresidents influx as well as reduced expenses of banks on clients’ import contracts payment. The National Bank of the Kyrgyz Republic in the reporting month conducted transactions on USD purchase at the foreign exchange auctions.  

In general, the weighted average USD exchange rate in the inter-bank foreign exchange auctions reduced by 1.4% and constituted 34.5533 KGS/USD by the end of the month; the USD discount rate reduced by 1.1% and constituted 34.7547 KGS/USD. 

The overall volume of transactions on USD purchase and sales in the foreign exchange auctions constituted 93.5 million USD, decreasing by 22.7% in comparison with July. The volume of the National Bank transactions on USD sale in the reporting month constituted 38.1 million USD, decreasing by 50.3% in comparison with July. The volume of commercial banks transactions on USD purchase and sales in the foreign exchange auctions increased by 24.8% and constituted 55.4 million USD. 

The USD spot rate in exchange offices in the first half of August was fluctuating within a small range, whereas in the second half of the month it was mainly reduced. In total, the weighted average USD selling rate in exchange offices decreased by 0.8% and constituted 34.8103 KGS/USD by the end of August. On average, in August the USD selling rate in exchange offices was 0.16 soms higher than the weighted average rate at the inter-bank foreign exchange auctions. The daily average fluctuation of USD selling rate in exchange offices decreased from 0.08 to 0.07%, and the average margin on USD buying/selling transactions increased from 0.41% to 0.43%. 

EUR exchange rate dynamics in exchange offices was also formed mainly under the influence of its dynamics on the external markets. Within a month, the EUR exchange rate was considerably decreasing, and only in the third decade of the month, there was its short time increase. In general, the monthly weighted average EUR selling rate in exchange offices decreased by 6.6% and constituted 51.2474 KGS/EUR by the end of the month. The daily average fluctuation of EUR selling rate increased from 0.14 to 0.23% and the average margin on buying/selling transactions increased from 0.57 to 0.62%.. 

The RUB exchange rate in currency exchange offices at the beginning of August was strongly decreasing, after that at the middle of the month it was subject to significant fluctuations and in the last decade of August it was also decreasing. In general, the monthly weighted average RUB selling rate in exchange offices decreased by 5.6% and constituted 1.4039 KGS/RUB by the end of the reporting period. The daily average fluctuation of RUB selling rate increased from 0.15 to 0.32% whereas the average margin increased inconsiderably from 0.79% to 0.88%.  

The KZT exchange rate in currency exchange offices was fluctuating in a short range and totally within a month it reduced by 0.4% and constituted 0.2896 KGS/KZT by the end of August. The daily average fluctuation of KZT exchange rate decreased from 0.12 to 0.07%, and the average margin increased from 0.94% to 1.0%. 

In August, the total volume of currency buying/selling transactions in currency exchange offices reduced by 6.1% and constituted 2391.3 million soms. Herewith there was a reduction of all major currencies transactions volume. As a result, the share of transactions with USD and KZT reduced to 58.4% and 11.6% correspondingly, whereas the share of transactions with EUR and RUB increased to 11.9% and 17.0% correspondingly. The share of transactions with other currencies increased from 1.0 to 1.1%.