The economic week of Kyrgyzstan fully reflected the onset of the winter period. However, the National Bank of the Kyrgyz Republic still continued foreign exchange intervention in order to maintain a stable exchange rate of the national currency, while at the same time giving explanations of the reasons for frequent interventions, while maintaining the size of the discount rate in the same form. The young head of the country's agricultural sector announced that the approach to agriculture has changed and now they are taking a cluster approach. At the same time, it was announced that farmers can go out with their goods to the country's commodity exchange.
On the whole, the week was as stable as possible in the context of preparations for the upcoming presidential elections.
New coins. The National Bank of Kyrgyzstan puts into circulation silver and copper-nickel collection coins «Kyrgyz Kurosh» of «World nomad games» series from Dec. 1, 2020.
The collection coin «Kyrgyz kurosh» of «World nomad games» series was issued to revive and popularize ethnic sports and is dedicated to the IV World Nomad Games.
Kyrgyz kurosh is among the oldest types of national sports games of the Kyrgyz people, which is a belt wrestling.
Discount rate of NBKR. At the end of November 2020, the Board of the National Bank of Kyrgyzstan decided to keep the discount rate (key rate) at 5%. The decision entered into force on Dec. 1, 2020.
The explanation of the Board says that the epidemiological situation in the world remains tense. Baseline forecasts from international organizations assume that the global economic recovery will be long, uneven and fraught with uncertainty. Volatility in the global commodity markets remains.
The recovery of economic activity in the Kyrgyz Republic slowed down somewhat amid the influence of negative external and internal factors. A significant decline in production volumes continues in almost all sectors of the economy. The return of the economy to the trajectory of sustainable economic growth will largely depend on the epidemiological situation in the country, the speed of recovery of the economies of the trading partner countries, as well as the dynamics of prices in the world commodity markets.
Reasons for intervention. This week, the National Bank of the Kyrgyz Republic gave an explanation of the reasons for frequent interventions in the foreign exchange market in November.
In November, an excess of demand for foreign currency over its supply was observed in the domestic foreign exchange market.
External factors, in particular volatility in commodity markets, the introduction of repeated restrictions in a number of countries due to the COVID-19 pandemic and the associated negative expectations in the global economy, were factors of pressure on the exchange rate of the national currency and led to foreign exchange interventions by the National Bank for smoothing out sharp fluctuations in the exchange rate, the National Bank of the Kyrgyz Republic said.
In November, the National Bank of the Kyrgyz Republic carried out 11 interventions and sold USD 84.7 million.
At the beginning of December, another intervention was carried out and the National Bank sold USD 5 million 250 thousand.
Farmers on the stock exchange. This week, the Ministry of Agriculture, Food Industry and Land Reclamation of the Kyrgyz Republic, in order to support farmers and provide an opportunity for products to enter world markets, signed a Cooperation Agreement with the Kyrgyz Stock Exchange CJSC.
The agreement provides for the creation of a list of exchange commodities, assistance to domestic manufacturers in entering the commodity markets of the EAEU member states, and identification of promising areas.
An important advantage for the farmers of the republic is access to world markets and the ability to trade not only goods, but also futures (goods with future delivery). Moreover, each futures contract on the commodity exchange is simultaneously a purchase for one party and a sale for the other party. In addition, large customers can find the necessary volumes and insure against price volatility thanks to hedging (insurance, guarantee).
In addition, the Ministry of Agriculture pointed out that one of the advantages of exchange transactions is that they do not require notarization.
“Trading operations on the exchange are carried out through an electronic trading system in real time. You can manage trades via the Internet from anywhere in the world. Individuals and legal entities, residents and non-residents of the Kyrgyz Republic can be participants in electronic exchange trading. Participants carry out all operations on the exchange through traders,” the ministry explained.
It is specified that registration and accreditation on the exchange are free.
Cluster approach. This week it was announced that a cluster approach is used in Kyrgyzstan for the development of the agricultural industry.
Minister of Agriculture, Food Industry and Land Reclamation Tilek Toktogaziev said that the advantage of the cluster approach is that one can soberly assess the advantages and disadvantages of products.
“A cluster approach is necessary for detailed analysis and work to improve exported domestic products,” he said.
Kabar News Agency
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