Kyrgyzstan may tighten controls on currency exchanges
BISHKEK. March 13 (Interfax) - Bankers in Kyrgyzstan have proposed tightening controls over the operation of currency exchange offices following a wave of speculation that caused significant fluctuations in the som exchange rate.
Prime Minister Zhantoro Satybaldiyev met with the chairmen of all of Kyrgyzstan's commercial banks to discuss the situation on the currency market and measures to strengthen controls on retail currency exchange locations, the government press service told Interfax on Thursday.
"The speculation on the currency market was created by the owners of currency exchange points who took advantage of the opportunity to offer totally unjustified dollar and euro exchange rates, stimulating a foreign currency buying frenzy," the meeting participants concluded.
They proposed studying "several options for tightening up operations at the currency exchange points," the press service said.
Those options could include "requiring those exchange points to be collocated at commercial banks, as is the practice in numerous developed countries, or strengthening legislation and increasing several-fold the fines for violations of the statutory requirements," it said.
Demand for foreign currency spiked in Kyrgyzstan after neighboring Kazakhstan announced the devaluation of the tenge on February 22. As a result, the som weakened to 60 som/$1 and 80 som/EUR1 on certain days. Intervention by the National Bank managed to stabilize the exchange rate situation.
The som has lost 10.8% of its value against the dollar since the beginning of the year, from 49.184 som/$1 on January 1 to 54.4999 som/$1 on March 13, according to National Bank data.