National Bank - The Times Of Central Asia

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Kyrgyzstan Eyes Digital Currency to Modernize Financial System

The National Bank of the Kyrgyz Republic (NBKR) has announced plans to launch a digital national currency, the digital som. The financial regulator expects the initiative to bolster the country’s financial sector and enhance public administration. New Opportunities The NBKR envisions the digital som transforming Kyrgyzstan’s financial landscape and increasing cashless transactions. One major advantage is improved control over budget spending. Additionally, the digital currency will allow payments even in areas without Internet access - crucial for remote regions with limited connectivity. Using simple technologies such as QR codes and mobile applications, citizens will be able to make quick and convenient payments for goods and services. “The monopoly of central banks to issue money is already ending. Anyone with a computer can create cryptocurrencies and various coins. We are keeping pace with this trend,” noted Akylbek Japarov, Chairman of the Cabinet of Ministers. He added that the Ministry of Finance plans to issue digital currency by 2025, allocating up to 27 billion KGS ($314 million) for digital bonds, treasury bills, and gold-backed coins. Under the government’s plan, the digital som will coexist with traditional cash and non-cash currencies. Authorities have devised mechanisms to facilitate its integration into the financial market. Commercial banks connected to the system will receive digital soms in their digital wallets, while equivalent amounts will be debited from their accounts with the National Bank. Transfers of digital soms between individuals will occur via existing banking infrastructure. Digital Stability The NBKR aims to integrate the digital som into the financial system by the end of 2026, with prototype testing scheduled for early 2025. Experts highlight the potential benefits despite some challenges. Economist Nurgul Akimova explained to Times of Central Asia that the Central Bank’s digital currency will feature robust security measures, including advanced cryptography to prevent fraud and ensure confidentiality. State control over issuance will ensure stability and reliability, distinguishing it from electronic money, which can be vulnerable to bank bankruptcies. Digital currency also offers new opportunities for public administration, particularly in taxation. Akimova noted that programmable features could automate tax deductions and other payments to the state, fostering trust and simplifying interactions between citizens and the government. “For the digital som to succeed, it must be widely accessible and easy to use, complementing existing financial instruments,” Akimova added. “Drawing on global experience and our unique national context, digital currency could become a universal means of payment for everyone. This marks a step toward a more modern, inclusive, and sustainable financial system in Kyrgyzstan.” Challenges Ahead However, certain hurdles remain. Akimova pointed out that introducing the digital som to international markets could pose difficulties, as cross-border payments in digital currencies will require the approval of other states.

Banking Oil State Budget OPEC National Bank

National Bank of Kazakhstan Predicts Higher 2025 Oil Prices Than Bank of America

The National Bank of Kazakhstan (NBK) has revised its forecast for 2025 oil prices, lowering the projected cost from $82.5 to $70 per barrel. Despite this adjustment, the NBK remains more optimistic than Bank of America, which recently reduced its 2025 oil price forecast to $65 per barrel. Bank of America’s Forecast Initially, Bank of America analysts projected Brent oil prices at $80 per barrel for 2025, aligning closely with the NBK's earlier forecast of $82.5. However, last week, Francisco Blanch, head of global commodities and derivatives research at Bank of America, announced a significant revision, citing oversupply and reduced demand driven by the global shift toward cleaner energy sources and transportation. The new forecast sets oil prices at $65 per barrel. NBK’s Adjusted Outlook In its updated Monetary Policy Report, the NBK revised its oil price forecast for 2025 to $70 per barrel, compared to an average of $80.3 in 2024. The adjustment reflects weaker anticipated demand from China and OECD countries, coupled with slower global economic growth. The NBK noted that "the relaxation of production restrictions by OPEC+ countries starting in 2025, alongside increased output from North and South America, will likely create a supply surplus in the oil market." External Influences The U.S. presidential election results could also impact global oil dynamics. President-elect Donald Trump and his administration have pledged to sharply increase domestic oil production beginning in January 2025, aiming to reduce petroleum prices. Additionally, Trump has suggested a potential withdrawal from the Paris Climate Agreement, which could further incentivize support for U.S. oil companies. For Kazakhstan, declining oil prices present significant fiscal challenges. According to the Ministry of Finance, the country collected 655.2 billion KZT ($1.2 billion) in mineral extraction tax (MET) from oil companies during the first 11 months of 2024. Oil export revenues contributed approximately 2 trillion KZT ($3.8 billion), bringing total budget revenues from the oil sector to over 2.3 trillion KZT ($4.4 billion) this year. The potential reduction in oil prices could, therefore, have a substantial impact on Kazakhstan’s economy, particularly on its budgetary revenues derived from the oil industry.

EDB National Bank money Finance Banking Economy Currency

EDB Forecasts Strengthening of the Tenge in 2025

The Eurasian Development Bank (EDB) has projected a strengthening of Kazakhstan’s national currency, the tenge, in 2025. This forecast was presented by Aigul Berdigulova, a senior analyst at the EDB’s Country Analysis Center, during the bank’s macroeconomic outlook for the Eurasian Economic Union (EAEU) member states. Exchange Rate Outlook The tenge’s exchange rate has been under significant pressure, depreciating from 495 KZT per U.S. dollar in mid-November to 523.58 KZT by December 5, according to Kazakhstan’s National Bank. Exchange offices have reported rates as high as 525 KZT per dollar. The National Bank attributes this decline to external factors, such as fluctuating global commodity prices - critical to Kazakhstan’s export economy - and the weakening of the Russian ruble, a key trade partner’s currency. Internal factors, including heightened demand for foreign currency, have further contributed to the tenge’s volatility. To stabilize the market, the National Bank intervened with $1.2 million from the National Fund in November. Despite these challenges, EDB analysts anticipate a rebound in 2024 and beyond. “We believe the current volatility in Kazakhstan’s currency market is temporary,” said Berdigulova. She emphasized that the National Bank and government are employing timely measures, including mandatory sales of 50% of foreign currency earnings by quasi-governmental entities and increased transfers from the National Fund. The EDB forecasts the average annual exchange rate in Kazakhstan to reach 486 KZT per dollar in 2025, a slight depreciation from the projected 466 KZT per dollar in 2024. By 2026-2027, the tenge is expected to stabilize at around 497 KZT per dollar. Inflation and Monetary Policy High inflation remains a concern. The EDB predicts inflation in Kazakhstan will decline to 7.3% by the end of 2025, hindered by rising tariffs for housing and utilities. To manage inflation, the National Bank is likely to maintain a high prime rate, above 15%, through the first quarter of 2025. However, as inflationary pressures ease, the rate may decrease to 11.25% by late 2025. External Influences and Oil Revenues Marina Sobolevskaya, head of the EDB’s Country Analysis Center, acknowledged that the Russian ruble's depreciation would continue to impact the tenge, with the ruble expected to weaken from 92.5 per dollar in 2024 to 104 per dollar in 2025 and 107 per dollar by 2027. On the other hand, Kazakhstan’s currency could gain support from increased oil production, particularly from expanded operations at the Tengiz oil field. Higher exports and foreign currency inflows could mitigate currency fluctuations in the domestic market. Short-Term Recovery The possibility of a short-term recovery for the tenge was also suggested by Murat Temirkhanov, an advisor at Halyk Finance. He attributed recent volatility to a surge in demand for dollars, driven by sanctions-induced ruble depreciation. Temirkhanov argued that the tenge-dollar exchange rate’s sensitivity to the ruble is overstated, given the relatively small share of ruble settlements in Kazakhstan’s foreign trade. Halyk Finance estimates the tenge’s current exchange rate of 525 KZT per dollar is above its fundamental value, which should be closer to 505 KZT per dollar....

National Bank money Cultural Heritage Manas Culture

Kyrgyzstan Unveils Record-Breaking Collector Coin

The National Bank of Kyrgyzstan has unveiled the most expensive collector coin in its history - a gold coin titled “Aikol Manas.” The initiative aims to promote oral folk traditions and preserve the cultural heritage of the Kyrgyz people. The coin was officially released on December 2. The National Bank emphasized the cultural significance of the epic Manas, which holds a central place in Kyrgyz's spiritual life and is recognized as a global masterpiece of oral folk art. The epic narrates the story of the legendary warrior Manas, who, through his courage and leadership, united the Kyrgyz tribes to secure independence and freedom for their native land. The coin's obverse features an intricate depiction of Manas in battle armor astride his horse, Akkula, set against the snowy peaks of the Ala-Too mountains. Above, the inscription “Aikol Manas” is engraved, with details of the gold's purity (Au 999) and weight (15.55g) on the right. At the bottom are the coin’s face value (200 KGS) and the symbol of the Kyrgyz currency. On the reverse, the coat of arms of the Kyrgyz Republic is framed by traditional national ornaments symbolizing Kyrgyz warriors. Along the circumference, the text “National Bank of the Kyrgyz Republic” is engraved, with the year of issue, 2024, displayed at the bottom. The coin is an official means of payment in Kyrgyzstan, packaged in an acrylic capsule within a protective case and accompanied by a certificate of authenticity. Priced at 123,400 KGS ($1,420), it is available for purchase at the National Bank’s cash desks. Since gaining independence, Kyrgyzstan has issued several gold collector coins celebrating its cultural heritage. The first was released in 1995 to honor the 1,000th anniversary of the Manas epic. In 2015, the National Bank introduced the “Snow Leopard” coin, featuring diamond inlays. For the 30th anniversary of independence in 2021, a gold coin with a face value of 100 KGS was issued.

Finance Banking State Budget money National Bank

Kazakhstan’s National Bank Raises Prime Rate to 15.25% Annually

The Monetary Policy Committee of Kazakhstan’s National Bank has raised the prime rate to 15.25% per annum, with an allowable deviation of 1 percentage point. This adjustment comes in response to the sharp weakening of the national currency, the tenge. The decision is grounded in updated forecasts and assessments of inflationary risks. The National Bank cited easing monetary conditions—driven by the tenge's depreciation, declining real interest rates, and heightened inflation expectations—as key factors behind the rate increase. Financial market volatility has further underscored the need for this measure. The National Bank emphasized its commitment to closely monitoring market dynamics and taking additional measures if needed to stabilize inflation. The central goal remains returning inflation, which has risen to 8.5%, to a target of 5%. The next decision on the prime rate is scheduled for January 17, 2025. Role of the Prime Rate The prime rate is a critical economic tool, directly influencing credit costs for banks and shaping inflation trends. Determined through an analysis of economic conditions, it regulates the money market. While a lower prime rate may temporarily weaken the tenge, it can boost production and economic growth in the medium term. Recent Adjustments The latest hike follows a series of previous adjustments. In February 2024, the prime rate was reduced to 14.75%, followed by another decrease to 14.25% in July. The rate was maintained at this level in October before this recent increase. Looking ahead, the National Bank has also published a schedule of rate decisions for 2025, underscoring its transparent approach to monetary policy.

Finance Banking GDP State Budget National Bank

Kyrgyz National Bank Maintains Discount Rate at 9% Amid Stable Inflation and Economic Growth

The National Bank of the Kyrgyz Republic has announced its decision to keep the discount rate steady at 9%, according to a statement published on its official website. The Bank credited its effective monetary policy for maintaining stable inflation. As of November 2024, annual inflation dropped from 7.3% at the start of the year to 5.2%, aligning with the regulator’s targets. Inflationary pressures remained moderate, with slowed price growth in both food and non-food categories. Key drivers of price levels include strong domestic demand and the impact of tariff policy measures. Kyrgyzstan’s economy continues to demonstrate robust growth, primarily driven by expansion in the construction and services sectors. Real GDP grew by 9.6% during the first ten months of 2024, fueled by increased domestic consumption supported by rising household incomes. Higher real wages and a surge in individual remittances have contributed significantly to this growth. Fixed asset investments, largely financed by domestic sources, have also risen. The domestic foreign exchange market has shown resilience, with fluctuations in the national currency attributed to seasonal factors and balanced supply-demand dynamics. The National Bank has conducted $20.75 million in net foreign currency sales since the beginning of the year to prevent sharp exchange rate volatility. The Bank has progressively adjusted its discount rate over the past two years. In November 2022, it was reduced from 14% to 13%, followed by further reductions in 2024: from 13% to 11% in April and then to the current 9% in May. The next review of the discount rate is scheduled for January 27, 2025.