DUSHANBE, July 25, 2016, Asia-Plus – The National Bank of Tajikistan (NBT) has reportedly increase purchase of gold by 45 percent.
In a report released at a news conference in Dushanbe, Tajik central bank head Jamshed Nourmuhammadzoda revealed on July 25 that Tajikistan has increased its gold and currency reserves from 1.4 months of imports to 2.4 months of imports over the first six months of this year.
If imports into the country over the first six months of this year have amounted to 1.5 billion U.S. dollars, the country’s gold and currency reserves have been increased over the report period to 600 million U.S. dollars.
We will recall that Tajikistan gold and currency reserves last year amounted to 481 million U.S. dollars, 28 percent more than in 2013.
Foreign-exchange reserves (also called forex reserves or FX reserves) are assets held by a central bank or other monetary authority, usually in various reserve currencies, mostly the United States dollar, and to a lesser extent the euro, the pound sterling, the Japanese yen, and used to back its liabilities—e.g., the local currency issued, and the various bank reserves deposited with the central bank by the government or by financial institutions. As most countries engage in international trade, reserves would be important to assure that trade would not be interrupted in the event of a stop of the inflow of foreign exchange to the country, what could happen during a financial crisis for example. A rule of thumb usually followed by central banks is to at least hold an amount of foreign currency equivalent to three months of imports. As commercial openness increased in recent years (part of the process known as globalization), this factor alone could be responsible for the increase of reserves in the same period. As imports grew, reserves should grow as well to maintain the ratio. Nonetheless, evidence suggests that reserve accumulation was faster than what would be explained by trade, since the ratio has increased to several months of imports. The external trade factor also explains why the ratio of reserves in months of imports is closely watched by credit risk agencies.
A gold reserve is the gold held by a national central bank, intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g. paper money), or trading peers, or to secure a currency.
