DUSHANBE, February 16, 2016, Asia-Plus –
Bloomberg
has listed Tajikistan among five countries squeezed by currency pegs.
According to a
Bloomberg
survey, individuals and businesses in five nations across central Asia, the Middle East and Africa are paying anywhere from 4 percent to 136 percent more than official exchange rates to get their hands on dollars.
So-called black markets reportedly flourish at times when there’s a shortage of greenbacks and are one indicator of how much a currency should be allowed to depreciate to reach its fair value.
Central banks that uphold pegs have been under strain after tumbling commodity prices and slowing global growth weakened currencies from Brazil to Russia by at least 18 percent in the past year.
In the four months that followed China’s shock devaluation of the yuan in August, Kazakhstan, Argentina and Azerbaijan abandoned control of their exchange rates to boost competitiveness and avoid draining reserves.
Tajikistan together with Uzbekistan, Angola, Egypt and Nigeria was listed among the countries squeezed by currency pegs.
These countries are reportedly maintaining fixed exchange rates that are unsustainable. Once the pegs break, investors in the local currency face significant losses.
According to
Bloomberg
, thriving unregulated trading in these countries may be forcing central banks to reassess currency policy as oil prices trade near 12-year lows, unrest in the Middle East chokes revenue from tourism and devaluations in key export markets hurt trade.
“Tajikistan relies on remittances from workers abroad, notably in Russia, for about half of its gross domestic product, according to SEB’s Hammarlund, who predicted the somoni will depreciate by about 30 percent against the ruble in the coming months,” the
Bloomberg
survey said, noting that the somoni dropped 25 percent last year.
Meanwhile, according to data of the National Bank of Tajikistan (NBT), an official exchange rate of the Tajik national currency against the dollar last year fell 31.7 percent dropped, while the market exchange rate of the somoni against the dollar last year fell 38.6 percent.
