IMF recommended Kyrgyzstan to limit interventions in the foreign exchange market

Almaty. February 5. Silkroadnews - The International Monetary Fund (IMF) recommended the authorities of Kyrgyzstan to limit interventions in the foreign exchange market of the republic to maintain the national currency, Kyrgyz som. This is stated within the message of the IMF in the Kyrgyz Republic, KyrTAG reports.
According to the experts of the international financial organizations, such policy of the National Bank of Kyrgyzstan in the future may lead to a reduction of its reserves and a decrease in the competitiveness of the Republic’s producers. At the same time the Fund’s representatives believe that during the “turbulent period” the National Bank ensured the functioning of the foreign exchange market in a quite successful manner.
The IMF also gave evaluation of the actions by the government of Kyrgyzstan on reduction of dollars’ circulation in the country.
“De-dollarization is a long-term process that requires a comprehensive approach based on the market principles and macroeconomic stability contributing to the strengthening of the financial sector. Due to this we shall avoid the conversion of mortgage loans denominated in foreign currency in excess of the limits set,”- the document says.
To remind - a few days ago, the government of Kyrgyzstan decided to transfer the mortgage loans earlier taken by the citizens of the country in dollars’ terms into the national currency, using a previous year rate. The budget losses of 574 million som ($7.6 million) shall be reimbursed by the state.
Last month to support the som rate the National Bank of Kyrgyzstan had 17 interventions in the foreign exchange market by selling $64.550 mln. This enabled the Kyrgyz currency exchange rate to remain stable.
According to official statistics, at the moment the international reserves of the National Bank of Kyrgyzstan make about $1.75 billion. Over the past year the Kyrgyz Som depreciated by about 29% in relation to the leading world currencies. During this time, the total volume of foreign exchange intervention in the country amounted to $373.2 million.