According to reports from global media, the US dollar is showing a strengthening trend in global markets. Specifically, the Australian dollar rose by 0.2% against the American currency. The yen also showed slight changes after a surge due to increased manufacturing activity in Japan.
The South Korean won and the Singapore dollar fell by 0.1% against the US dollar. Against the Chinese yuan, the foreign currency rose and traded just below a six-month high. However, in Kyrgyzstan, the dollar has been depreciating for more than a month and a half, reports the financial publication "Akchabar."
Since March 28, the American currency in Kyrgyzstan has been on a downward trajectory and has not changed course during this time. Against the backdrop of the dollar's strengthening on the world stage, this looks strange.
It's not the dollar falling; it's the Kyrgyz economy strengthening
From March 27 to May 21, the National Bank of Kyrgyzstan conducted seven reverse interventions, purchasing $144.85 million on the foreign exchange market. This trend has not been observed since 2022.
"According to data from the first quarter of 2024, the Kyrgyz economy is showing stable growth. During this period, the country has entered new markets, which confirms the positive forecasts of the Ministry of Economy," says candidate of economic sciences, associate professor Yalkun Dautov.
According to him, in the first four months of the year, Kyrgyzstan's tax system collected 3.8 billion soms more in taxes than planned. This confirms that the internal economic conditions are in an active mode of development. Increased tax revenues and improved economic positions indicate a gradual strengthening of Kyrgyzstan's position on the international stage.
No longer needing the dollar?
Another important factor is the discussions within the EAEU about the phased abandonment of the dollar in mutual settlements.
"Of course, events in neighboring states and sanctions also affect the economic development of our country. These factors lead major players in the currency markets to gradually move away from operations with the dollar. We see that China and Russia are actively developing economic integration, and as our neighbors, they have a significant influence on us," the expert notes.
He recalls that 20 years ago, the Kyrgyz som was hardly quoted within the CIS, unlike the ruble, yuan, or tenge. But today the situation has significantly changed.
Additionally, the National Bank of Kyrgyzstan is setting the task for financial market participants to conduct operations in the national currency.
"The national currency is strengthening, and more organizations are conducting their operations through state banks, i.e., switching to soms. This reduces dependence on the dollar and supports internal economic growth," the economist continued.
With the growth of the national currency, the minimum living wage should also rise
Yalkun Dautov believes that the primary task of any state is to strengthen its national currency.
"Of course, along with this, the prices of food and utilities are rising. This is due to global trends, and we must orient ourselves to this trajectory. But the standard of living of the population is also increasing, as are pensions and benefits. All this should happen in a unified format. For example, the average salary for the first four months exceeded 28 thousand soms, while the minimum consumer basket amounted to 8 thousand soms. This is low, and the minimum consumer basket really needs to be increased under the conditions of rising prices," the expert says.
Currently, the economy of any country depends not only on internal factors but also on external ones. External factors can suddenly impact any situation. Kyrgyzstan is not insured against market crashes, climatic disasters, or military operations in the region. These factors directly affect the economy.
"We don't have access to the sea, which limits our possibilities. A railway project connecting China, Kazakhstan, and Uzbekistan is planned. This could be a powerful economic breakthrough, opening up new markets. However, long-term forecasts are difficult to make, so we can only operate within a month or two. During this period, there should be no sharp fluctuations or changes in the financial market," says Yalkun Dautov.
Based on the general trend, the expert believes that the dollar's growth will remain within current values. Currently, the rate is around 88 soms; at most, it might reach 90 soms, or it may not, as the National Bank continuously takes necessary measures to stabilize the situation.
"The Cabinet is also trying to take control of all commercial banks, creating conditions to prevent sharp fluctuations. I think that over the next two months, we won't see significant changes, as the summer period is usually more stable. Fluctuations may begin in the fall, related to economic and political factors," the expert concluded.
CentralasianLIGHT.org
May 27, 2024