Foreign Exchange Market  

(September 2008) 

On the foreign exchange market in September, there was a vigorous growth of the USD exchange rate and only at the end of the month the rate decreased a little. The USD exchange rate increase was provided by the USD currency demand increase on the part of commercial banks under the influence of internal and external factors. Internal factors include first of all the demand increase due to trade balance growing deficit. As for external factors, the measures performed by the Governments of the USA, some European and Asian countries in the framework of fight against global financial crisis, considerably influences the USD exchange rate dynamics. Moreover, the situation on the foreign exchange markets of Russia and Kazakhstan, characterised by the USD currency demand rate increase in the conditions of capital outflow from Russia and foreign loan payments in the banking system of Kazakhstan, had influence as well.  

The National Bank of the Kyrgyz Republic in order to satisfy the increased USD demand rate, performed transactions on USD purchase in the foreign exchange markets within a month, and at the end of September it sold USD currency.  

In general the weighted average USD rate in the inter-bank foreign exchange markets increased by 6.0 percent and constituted 36.6401 KGS/USD at the end of September, whereas the discount USD rate increased by 5.5 percent and constituted 36.6688 KGS/USD.  

The overall transactions volume on USD sale/purchase in the foreign exchange markets decreased by 5.3 percent and constituted 88.5 million US dollars. The volume of transactions of the National Bank of the Kyrgyz Republic on USD purchase constituted 21.6 million US dollars, and on USD sale – 19.6 million US dollars. The volume of transactions of commercial banks on the USD purchase/sale decreased by 14.5 percent in comparison with August and constituted 47.4 million US dollars 

The USD dynamics in exchange offices was similar to its dynamics in the inter-bank foreign exchange markets: within a month there was a vigorous growth of USD exchange rate and only at the end of the month there was a certain decrease. In general, the weighted average USD selling rate in exchange offices increased by 4.4 percent and constituted 36.3253 KGS/USD by the end of the month. The USD selling rate in exchange offices was 0.09 som higher than the weighted average rate in the inter-bank foreign exchange markets. The daily average fluctuation of USD selling rate in exchange offices increased from 0.07 to 0.34 percent, and the average margin on USD buying/selling transactions increased from 0.43 to 0.50 percent. 

EUR exchange rate dynamics in currency exchange offices was also formed mainly under the influence of its dynamics on the external markets as well as changes of KGS exchange rate against USD in the domestic market. In the first decade of the month, the EUR exchange rate changed slightly, in the second decade it considerably increased and in the third decade it became decreasing. In general in September, the weighted average rate of EUR selling rate in exchange offices increased by 2.3 percent and constituted 52.4031 KGS/EUR by the end of the month. The daily average fluctuation of EUR selling rate increased from 0.23 to 0.43 percent and the average margin on buying/selling transactions increased from 0.62 to 0.74 percent. 

The RUB exchange rate in currency exchange offices also changed slightly at the beginning of September, then it mainly increased and at the end of the month it became decreasing. In general, the monthly weighted average RUB selling rate in exchange offices increased by 1.6 percent and constituted 1.4268 KGS/RUB by the end of the reporting period. The daily average fluctuation of RUB selling rate increased from 0.32 to 0.35 percent whereas the average margin increased from 0.88 to 0.99 percent.  

The KZT exchange rate in currency exchange offices was mainly increasing over the whole month, and only in the third decade of September there was a short time decrease. In general, the monthly weighted average KZT selling rate in exchange offices increased by 5.1 percent and constituted 0.3044 KGS/KZT by the end of the reporting period. The daily average fluctuation of KZT exchange rate increased from 0.07 to 0.24 percent whereas the average margin increased inconsiderably from 1.0 to 1.1 percent.  

In September, the total volume of currency buying/selling transactions in currency exchange offices increased by 1.4 percent and constituted 2424.9 million soms. Herewith there was an increase of all major currencies transactions volume. As a result, the share of transactions with USD increased by 61.1 percent, whereas with EUR, RUB and KZT decreased to 9.8, 16.3 and 11.5 percent correspondingly. The share of transactions with other currencies increased from 1.1 to 1.3 percent.