DUSHANBE, May 27, 2015, Asia-Plus — The spring 2015 edition of biannual Tajikistan Economic Update, released by the World Bank on May 25, says that interventions to prevent more rapid depreciation have been draining the country’s already low external reserves.
The report notes that according to the National Bank of Tajikistan (NBT), as of March 12, 2015, gross reserves were US$465 million, or about 1.1 months of import cover. In nominal terms, reserves had gone up by almost 12 percent from January 1, 2015. Yet due to currency market interventions, authorities lost an estimated US$140 million in gross reserves in 2014, and another US$17 million in the first two months of 2015. The NBT has committed to allowing more exchange rate flexibility but prefers to manage the process to prevent excessive volatility. However, until full exchange rate adjustment takes place, it will be very difficult to stabilize expectations, excessive volatility will remain a major risk, and reserves will further evaporate.
To allow the forex (foreign exchange) market to work and find a new equilibrium exchange rate, administrative controls should be lifted, multiple exchange rate practices eliminated, and interventions limited to those needed to avoid excessive fluctuations, the report says.
The official exchange rate for the somoni depreciated by 11 percent against the U.S. dollar in 2014 and another 9 percent in the first three months of 2015, according to the report.
Meanwhile, Tajik central bank noted recently that as of April 30, 2015, Tajikistan’s gold and currency reserves amounted to more than 3.15 billion somoni (TJS), which is equivalent to 503.52 million U.S. dollars. The country’s monetary gold reserves now amount to 2.18372 billion somoni and the country’s currency reserves now amount to 967.32 million somoni.
