Kyrgyzstan's gold reserves drop
By Vusala Abbasova
Kyrgyzstan's gold and currency reserves dropped to $1.8 billion. It has sold $160 million worth of the metal this year, and bought $31 million over the past month, said Tolkunbek Abdygulov, chairman of the National Bank.
Kyrgyzstan's foreign currency reserves stood at $2.116 billion in March 2014, according to the National Bank.
Abdygulov also commented on possibilities of new wave of devolution in Kazakhstan and repetition of the same scenario in Kyrgyzstan.
He said Kyrgyzstan has a different system of rates. “Kyrgyzstan selected the free-floating exchange rate since its independence, while Kazakhstan uses the currency corridor. If there are fluctuations in the exchange rate, the National Bank comes out with interventions," said Abdygulov.
All central banks in the CIS- countries have been forced to contemplate the devaluation of their respective national currency on the back of such events as the Ukrainian crisis and US-EU sanctions against Russia, noted Abdygulov in a conversation with EurasiaNet.org.
"The fallout from Russia’s economic downturn is forcing Kyrgyzstan to spend its limited reserves to fend off speculators and ease pressure off from its currency," added Abdygulov.
Abdygulov urged banks to increase their som capitalization using the crisis to try to strengthen rules for the Central Asian country’s under-regulated financial sector. He also would like to close thousands of poorly regulated currency exchange shops, which he accuses of sustaining the shadow economy and of spreading panic by speculating on the som, national currency of Kyrgyzstan.
The amount of several dozen interventions amounted to $530 million in 2014. The Kyrgyz National Bank suffered a difficult period last year. The trend of the som depreciation against the dollar forced the National Bank to repeatedly enter the market with currency interventions. This has in turn negatively affected the volume of gold reserves.
Kyrgyzstan ranks 86 in the world according to the May Statistics of World Gold Council. The official gold holdings of Kyrgyzstan is 4 tons (8.1 percent of reserves).
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