Exchange Rate Manipulated by National Bank?

The unexpected fall in the value of the US dollar against the Tajik somoni was orchestrated, sending a negative message to foreign investors, say economic experts.



The value of the dollar fell sharply last week from 3.5 somoni to the dollar, to 3.4.



The dollar has been steadily gaining strength in Tajikistan over the past year, its value increasing by 7.1 per cent. On January 30, President Imomali Rahmonov criticised the National Bank for allowing this to continue and, one week later, the trend was reversed.



Experts say this sudden devaluation of the dollar did not occur naturally as a result of market forces, but was orchestrated by the National Bank in response to the president’s remarks.



The National Bank maintains that it does not interfere with exchange rates and allows the market to take its course.



But according to a professor from one of the economic universities in Dushanbe, it is highly likely that the National Bank flooded the market with enough US currency to decrease the exchange rate.



During the course of this month the exchange rate will start to rise again, because “now the somoni is not backed by anything”, the source added.



Economist Hojimahmad Umarov says that due to high levels of National bank secrecy, it is difficult to decipher exactly how it manipulated the exchange rate but he agrees that last week’s turnaround was not caused by market forces.



The effect will be most keenly felt by foreign investors, whose money is now devaluing faster in Tajikistan than on the world market.



Umarov explains that “such actions are unnatural for the market and will have a negative impact on the image of the country. The dollar is falling and investors know that their money is losing value”.



If restrained artificially, the dollar will simply rise again because there are no Tajik produced goods on the market to keep it low, he adds.



The head of the National Bank Murodali Alimardonov said during a recent press conference in Dushanbe that the bank does not interfere with exchange rates and insists all shifts are influenced by the market.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)