October 23, 2014

October 23, 2014
This is bne's Eurasia daily newsletter, a list of the top stories from the country. You
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Eurasia TOP STORY
1. Yet another Central Asian central bank plays down currency fears
2. 1 Kazakh tenge under attack, money market rates double
3. Iran plans to link Kazakhstan, Turkmenistan with Turkey via Azerbaijan by rail
4. EU to revive talks on Trans-Caspian gas pipe with Azerbaijan, Turkmenistan
Eurasia Kazakhstan
5. Japan, Kazakhstan to sign investment agreement after 10-year wait
6. Kazakhstan appoints new Security Council secretary
7. Kazakhstan explores coal-to-oil opportunities
8. Kazakh parliament ratifies treaty with Russia on good-neighbourly relations
9. New deal in sight for Russia's radar shield in Kazakhstan
10. Kazakhstan to Offer Tourists Caviar Baths
11. Kazakhstan, Chevron and the Oil Workersí Plight
12. Kazakhstan to Award 100 Licenses for Geological Survey Work
On the website today
13. Russia bans Moldovan meat imports
14. CEE bad loans may make Austrian banks struggle in stress tests
15. UK touts nuclear plant funding model to Central Europe
Eurasia Macro
16. Armenia trying to achieve 4% growth in 2015
Eurasia Other Central Asia
17. Tajikistan looks to China as Russian remittances dry up
18. Tajikistanís cotton fiber exports reportedly fall more than 41%
19. Trade between Tajikistan, Moscow region approximately equal to $250 million ñ
Governor of Moscow region
20. Dushanbe, Moscow agree to expand supply of agricultural products from
Tajikistan
21. Official unemployment rate in Kyrgyzstan makes 2.3% as of October 1
22. Volume of counterfeit goods in Kyrgyzstan reportedly reaches $4.2 bln
23. Uzbekistan, Turkmenistan to ink joint documents
Eurasia Caucasus
24. US welcomes Azerbaijani presidentís pardon decree
25. Armeniaís joining BTK rail line may be considered after settlement of NagornoKarabakh conflict
26. Top NATO Commander: ëPartnership with Georgia Rock Solidí
27. European Union supported about 200 projects in Armenia
28. EBRD plans to implement 100m euros worth projects in Armenia in 2015
Eurasia TOP STORY
1. Yet another Central Asian central bank plays down currency fears
October 23, 2014
Jacopo Dettoni in Almaty
Authorities across Central Asia are rushing to damp down concerns over the state of
health of their respective currencies, with Kyrgyzstan's central bank reasserting the
soundness of the country's foreign currency reserves right on the heels of its Kazakh
and Turkmen counterparts.
“There is no shortage of US dollars in the Kyrgyz market,” Kyrgyzstan's central bank
said in a statement. “Commercial banks have sufficient amount of foreign currency
to meet the demand of the population.”
Central Asian currencies have been under pressure throughout the whole of 2014,
largely mirroring the troubles of Russia's sanction-hit economy and the ruble.
Kazakhstan's tenge devalued by 19% devaluation against the US dollar back in
February, the Tajik somoni lost around 5% against the greenback, and local press in
Turkmenistan reported currency exchange shops not selling dollars any more earlier
this month. Kyrgyzstan is no exception. The som lost 13.12% against the dollar
year-to-date and one dollar is now traded at 55.64 soms.
"The growth rate of the dollar to the som can be explained by its continued exposure
to external factors (global trend to strengthen the dollar, imposed sanctions against
Russia over the situation in Ukraine, the fall in oil prices since the beginning of the
year) and internal factors (increase in demand due to the need to pay for imported
goods, which may be due to the planned accession of Kyrgyzstan to the Eurasian
Economic Union), " the central bank said in a statement.
Russia's economic troubles and the plunging ruble are particularly hitting the flow of
remittances Kyrgyz citizens working in Russia send back home, which make up more
than 30% of the country's GDP, the World Bank estimates. Total remittances fell for
the first time in five years in the first quarter of 2014, the European Bank for
Reconstruction and Development said in a statement in September.
Kyrgyzstan economic growth is expected to slow down to 4.1% in 2014, down from
10.1% a year earlier, yet way higher than the average 0.8% forecast for the whole
Commonwealth of Independent States's (CIS), according to figures from the IMF.
“The outlook remains sensitive to regional developments, namely a further slowdown
in Russia,” the IMF stated at the conclusion of a mission to Bishkek in July. In a
push to address the challenging economic cycle and shore up the som/dollar
exchange rate, Kyrgyzstan's central bank has been actively involved in the currency
market and carried out net sales of more than $309mn since the beginning of 2014.
The bleak outlook of the Russian economy and the oil market worldwide is taking a
toll on the Kazakhstan economy too, with the government's economic growth
forecast for full 2014 now at 4.3% from a previous 6%. Concerns over a new
devaluation of the Kazakh tenge have spread throughout the local business
community.
“I believe there is no reason for concern. The cushion given [to the tenge] by the
February devaluation is very powerful," Kazakh news outlet Tengrinews quoted
Kairat Kelimbetov, head of Kazakhstan's central bank, as saying on October 21.
On the other side, Turkmenistan's president Gurbanguly Berdimuhamedow
addressed the issue of a supposed shortage of US dollars on October 20 by stating
that the country intends to maintain the currency exchange rate in the currency
market - the manat/dollar rate has been left untouched since early 2009.
2. 1 Kazakh tenge under attack, money market rates double
VTB Capital
October 23, 2014
Kazakhstan’s FX market has come under increasing scrutiny. Hence, the NBK
continued to strengthen the KZT in order to break down devaluation expectations
and concerns. However, we believe that the NBK is fighting what it considers
speculation, while the KZT faces more of a fundamental pressure coming from the
weakening RUB and declined crude prices, as well as C/A deterioration. In particular,
the KZT has appreciated near 2.8% against the RUB MTD, mainly driven by the
climbing USDRUR. RUBKZT has reached the 4.44 mark, and historically KZT had
devalued at 4.3-4.4 RUBKZT. Overall, last week, KZT firmed near 0.4% against USD
to 181.50, which brought about higher FX trading activity. This morning, USDKZT fell
to 181.34. We believe that the main hard currency seller at the moment is perhaps
the NBK, while the bid is broad based: households, corporates, et al.
Meanwhile, NDF implied rates spiked 10-16pp last week to 19-27% on a 1M- 3M
horizon. In addition, banks faced a visible liquidity squeeze last week, driven by an
outright cut of refinancing and increased FX interventions.
Hence, on 16 October the KZT one-week repo rate (TWINA) spiked to 14% and
declined only to 9% on Friday. Meanwhile, the cost of overnight FX swaps surged to
15-30%. The last time there was similar volatility on the money market was
February-March. However, on Monday, the liquidity situation calmed, with overnight
rates declining to 4-5% (though they have been 2-3% on average during last
months). This morning, overnight FX swap rates were back at 15%, as the NBK
strengthened KZT even more. We believe that the NBK might have increased the
liquidity provision in the repo market, where it has been absent since February.
Overall, we are sticking with our trade idea to buy USDKZT (which has become even
more appealing now), although perhaps it makes sense to take some profits on long
NDF positions. As we have previously outlined, the main risk for the short KZT
position is carry volatility, which was very well illustrated last week. Thus, that spike
in rates has raised average TWINA for October to 4.4% from 2.9% in September and
3.4% in August. The extreme was recorded in March, when average monthly TWINA
printed at 17.5%.
However, we also highlight that before February’s devaluation, money market rates
were elevated at 5-7% for a couple of months in a row (also calm periods changed
with days of elevated rates due to tax payments, for example). Therefore, we believe
that, actually, increased money market rate volatility might be perceived by market
participants as a sign of growing devaluation risks.
3. Iran plans to link Kazakhstan, Turkmenistan with Turkey via Azerbaijan
by rail
Trend
October 23, 2014
Currently, Iran is reviewing the issue of construction of a new rail line in order to
lock up the railway ring around the Caspian Sea, Iranís Deputy Minister of Roads and
Urban Development and CEO of Iranian Railways, Mohsen Pour Seyed Aghaei told
Trend Oct.22.
During the summit of the heads of Caspian Sea countries in Astrakhan, Russian
President Vladimir Putin proposed to create a railway ring around the Caspian Sea.
Read more here: http://en.trend.az/iran/business/2324953.html
4. EU to revive talks on Trans-Caspian gas pipe with Azerbaijan,
Turkmenistan
Trend
October 22, 2014
The European commission is interested in the negotiations with Azerbaijan and
Turkmenistan regarding the joint activities on the Trans-Caspian project, the head of
the EU delegation to Azerbaijan Malena Mard told reporters Oct.22.
She said that the EU attaches great importance to the implementation of the
Southern Gas Corridor project.
There is a tripartite format of the meeting on the Trans-Caspian project between the
EU, Azerbaijan and Turkmenistan, Mard said. She noted that she canít tell the exact
date of the meeting yet.
Read more here: http://en.trend.az/business/economy/2324674.html
Eurasia Kazakhstan
5. Japan, Kazakhstan to sign investment agreement after 10-year wait
Kazinform
October 23, 2014
Japan and Kazakhstan are to sign agreement on investments, according to Prime
Minister of Kazakhstan Karim Massimov.
"After almost 10 years of negotiations Japan and Kazakhstan will ink the agreement
on investments. I would like to take this opportunity and congratulate you on this
milestone in the history of the two nations," Prime Minister Massimov said at the 5th
session of the Japanese-Kazakhstani Joint Commission on economic cooperation.
Read more here: http://inform.kz/eng/article/2709185
6. Kazakhstan appoints new Security Council secretary
Kazinform
October 22, 2014
President N.Nazarbayev's Decree has appointed Azamat Abdymomunov, Deputy
Secretary of the Security Council of the Republic of Kazakhstan - Head of the
Secretariat of the Security Council of the Republic of Kazakhstan, Acting Assistant to
the President - Secretary of the Security Council of the Republic of Kazakhstan.
Read more here: http://inform.kz/eng/article/2708940
7. Kazakhstan explores coal-to-oil opportunities
Tengrinews
October 22, 2014
Kazakhstan is studying the possibility of processing coal into synthetic oil,
Tengrinews correspondent reports citing Energy Minister Vladimir Shkolnik, who
spoke at a Majilis, the lower chamber of the Kazakh Parliament, meeting dedicated
to introducing innovations into programs on subsoil users and increasing Kazakh
content in the country's energy projects.
"Geologically our reserves of coal are about 300 billion tons, whereas proven
reserves are 34 billion tons. This is an incredible potential. I just want to say to all
the oil companies that this is a serious competition to the oil and gas sector. Now
there are new technologies of gas chemical processing of coal. And when I look at
how science is developing ñ it is simply incredible: factories that produce about 600700 liters of synthetic oil from a ton of coal are already in place. The payoff period,
return on investment is two or three year, four years at most,î Schkolnik said.
Read more here: http://en.tengrinews.kz/politics_sub/Kazakhstan-explores-coal-tooil-opportunities-257025/
8. Kazakh parliament ratifies treaty with Russia on good-neighbourly
relations
Kazinform
October 23, 2014
At its plenary session the Kazakh Senate adopted the law "On ratification of the
Agreement between Kazakhstan and Russia on good neighborly relations and alliance
in the 21st century".
"Kazakhstan considers Russia as a key political and economic partner in the Eurasian
space. Development of multifaceted cooperation with Russia meets long-term
strategic interests of Kazakhstan," Kazakh Foreign Minister Yerlan Idrissov told
representing the bill.
Read more here: http://inform.kz/eng/article/2709174
9. New deal in sight for Russia's radar shield in Kazakhstan
AKIpress
October 23, 2014
Talks lie ahead with Kazakhstan to prolong Russia's use of the Balkhash radar station
based there as part of Russia's defense shield early warning system, reports ITARTASS.
Russia's government has approved documents for signing a deal to extend the
facility's operation under a 1994 accord between the two states, the official portal of
legal information reported on Wednesday.
Read more here: http://www.akipress.com/news:550145/
10. Kazakhstan to Offer Tourists Caviar Baths
EurasiaNet.org
October 22, 2014
What to get the oligarch who has everything? How about a caviar spa experience on
the shores of the Caspian Sea?
Billed as a ìblack caviar spa for real gourmands,î this is one of the leisure
experiences that will be available at the upmarket Kenderli resort in Kazakhstan
when it opens its doors in a few years. If immersing your body in a bath of fish eggs
is not to your taste, how about ìdances with seals?î
Read more here: http://www.eurasianet.org/node/70556
11. Kazakhstan, Chevron and the Oil Workersí Plight
The Diplomat
October 22, 2014
Tony Blair, recently awarded ìphilanthropist of the year,î has also been in the news
for providing services of a different kind to Kazakhstanís President Nursultan
Nazarbayev. A letter has surfaced in which the former U.K. prime minster offered the
president advice on how to tackle the ìZhanaozen issue,î concerning the death of
striking oil workers on Kazakhstanís Independence Day in 2011. This event was
another chapter in the history of resource industry development and its bitter
relationship with social and political development in the post-Soviet state. Blairís
involvement is a typical example of a continued refusal to acknowledge that there
are severe faults in the labor system TengizChevroil represents.
Read more here: http://thediplomat.com/2014/10/kazakhstan-chevron-and-the-oilworkers-plight/
12. Kazakhstan to Award 100 Licenses for Geological Survey Work
Oil and Gas Eurasia
October 23, 2014
Kazakhstan plans to issue from 50 to 100 licences for geological work, BNews.kz has
reported. The licences are to be issued beginning in 2015 after a number of subsoiluse laws and acts are amended in the country. The main points of the legislation are
aimed at improving the investment climate in the Central Asian nationís minerals and
raw materials sector.
The draft proposal containing the second package of amendments, the Code on
Subsoil Use will be presented in 2014-2015.
Read more here: https://www.oilandgaseurasia.com/en/news/kazakhstan-award100-licenses-geological-survey-work
On the website today
13. Russia bans Moldovan meat imports
bne
October 23, 2014
Russia has banned meat imports from Moldova on the grounds of health, following a
downturn in bilateral relations in the run up to Moldovaís parliamentary elections in
November.
Sergei Dankvert, head of Russiaís Federal Service for Veterinary and Phytosanitary
Surveillance (Rosselkhoznadzor) said on October 22 that the agency had discovered
meat imports from Moldova that were ìunsafe products from the veterinary and
sanitary point of viewî. Meat imports would therefore be banned from October 27.
"In certain instances meat from Moldova has come from unidentified sources and is
unsafe by veterinary-sanitary measures," Dankvert told Russian news agency TASS.
Read more here: http://www.bne.eu/content/story/russia-bans-moldovan-meatimports
14. CEE bad loans may make Austrian banks struggle in stress tests
bne
October 23, 2014
Around a dozen Eurozone banks have failed stress tests and will need to find new
capital, the European Central Bank will reveal on October 26, a report claims. Two
Austrian banks with strong connections to Central and Eastern Europe may be
included in that group.
Citing unnamed sources, Spanish news agency Efe reported on October 22 that at
least 11 banks, from six countries, are set to fail the check on the levels of capital at
Eurozone banks. Those of the 130 banks tested whose buffers fall below required
ratios to withstand another economic crunch will need to raise new cash. The stress
tests come ahead of a November 4 takeover of banking regulation by the ECB.
Three banks in Greece, three Italian lenders and two Austrian banks are among
those that preliminary data showed had failed the tests, Efe said, according to
Reuters. It gave no details of how much capital the banks would have to raise and
said this could yet change as numbers could be revised at the last minute.
Read more here: http://www.bne.eu/content/story/cee-bad-loans-may-makeaustrian-banks-struggle-stress-tests
15. UK touts nuclear plant funding model to Central Europe
bne
October 23, 2014
Excitement is building that stalled nuclear power projects around Central and Eastern
Europe might finally get off the ground, following a recent agreement between the
UK and Brussels over state aid for the construction of the Hinkley Point C plant.
The UK is keen to trumpet its role in opening the way and it brought a gaggle of
energy company executives to Prague on October 22 to tout for business.
The EU approved the UK's financing model for its first new-build nuclear power plant
in a generation on October 8. London isn't hanging about in efforts to leverage that
success, and is pushing the states of CEE to follow in its footsteps.
Read more here: http://www.bne.eu/content/story/uk-touts-nuclear-plant-fundingmodel-central-europe
Eurasia Macro
16. Armenia trying to achieve 4% growth in 2015
ARKA
October 22, 2015
he government makes every effort to ensure the planned 4% economy growth for
2015, Armeniaís premier Hovik Abrahamyan said.
There are many factors that may affect Armeniaís economy in todayís rapidly
growing world, the regional factors and Russia-West relations in particular, the
premier said.
Read more here:
http://arka.am/en/news/economy/government_doing_its_best_for_4_economy_gro
wth_in_armenia_in_2015_/
Eurasia Other Central Asia
17. Tajikistan looks to China as Russian remittances dry up
Financial Times
October 22, 2014
Tajikistan, one of the worldís poorest countries, is counting on an influx of Chinese
investment to cushion its economy from the reverberations of sanctions-hit Russia.
China is to invest at least $6bn in Tajikistan over the next three years, Jamoliddin
Nuraliev, the countryís deputy finance minister, says in an interview with the
Financial Times.
Read more here: at "http://www.ft.com/intl/cms/s/0/2c87ee20-58f9-11e4-954600144feab7de.html#slide0"
18. Tajikistanís cotton fiber exports reportedly fall more than 41%
Asia-Plus
October 22, 2014
Over the first nine months of this year, Tajikistanís cotton fiber exports have fallen
41.2 percent compared to the same period last year, according to the Agency for
Statistics under the President of Tajikistan.
In January-September this year, Tajikistan has reportedly exported 43,800 tons of
cotton fiber to the amount of 73.5 million U.S. dollars.
Read more here: at "http://news.tj/en/news/tajikistan-s-cotton-fiber-exportsreportedly-fall-more-41-percent"
19. Trade between Tajikistan, Moscow region approximately equal to $250
million ñ Governor of Moscow region
AKIpress
October 23, 2014
Tajik-Moscow Moscow region is developing economic relations with Tajikistan, the
portal of the Government of Moscow Region reported with reference to Governor
Andrei Vorobyov.
Economic relations between Tajikistan and Russia are developing. Today, the trade
turnover between the two sides is about $250 million, said Vorobyov at the meeting
with Chairman of the Majlisi Milli (upper house of parliament) of Tajikistan
Mahmadsaid Ubaydulloev on Wednesday.
Read more here: at "http://www.akipress.com/news:550122/"
20. Dushanbe, Moscow agree to expand supply of agricultural products from
Tajikistan
AKIpress
October 23, 2014
Moscow Mayor Sergei Sobyanin and Chairman of Dushanbe Mahmadsaid Ubaydulloev
agreed to expand the regular supply of fresh vegetables, fruits and other agricultural
products from Tajikistan to the Russian capital, according to the Moscow City Hall.
The corresponding agreement was reached at a meeting of the two mayors in
Moscow on Wednesday.
Read more here: at "http://www.akipress.com/news:550148/"
21. Official unemployment rate in Kyrgyzstan makes 2.3% as of October 1
Bishkek (AKIpress) - EmploymentSmall Official unemployment rate in Kyrgyzstan
made 2.3% as of 1 October 2014, the press service of the Ministry of Labor,
Migration and Youth reported on October 22.
The number of unemployed persons registered at the employment offices amounted
to 92.8 thousand people. The rate reduced by 0.3% compared to the same period
last year.
Read more here: at "http://www.akipress.com/news:550123/"
22. Volume of counterfeit goods in Kyrgyzstan reportedly reaches $4.2 bln
AKIpress
October 22, 2013
Pirate-DVDs Vice Prime Minister for Economy and Investment Valery Dil has urged
Kyrgyzstan to fight against counterfeiting on October 22 at the board session of
Kyrgyzpatent.
The volume of counterfeit goods in Kyrgyzstan reaches $4.2 billion, Vice Prime
Minister for Economy and Investment Valery Dil said referring to Russian President
Vladimir Putin at the session of the CIS Heads of State Council in Minsk (Belarus).
Read more here: at "http://www.akipress.com/news:550112/"
23. Uzbekistan, Turkmenistan to ink joint documents
Azernews
October 22, 2014
Uzbek President Islam Karimov will pay an official visit to Turkmenistan on October
23-24 upon the invitation of Turkmen counterpart Gurbanguly Berdimuhamedov.
The issues of developing the bilateral relations, important regional and international
issues are planned to be discussed as part of the regular Uzbek-Turkmen dialogue at
the highest level, the president's press-service reported.
Read more here: at "http://www.azernews.az/region/72264.html"
Eurasia Caucasus
24. US welcomes Azerbaijani presidentís pardon decree
Trend
October 23, 2014
The United States welcomes the October 17 pardon and release of four civil society
activists in Azerbaijan, including Hasan Huseynli, the U.S Department of State
website said Oct. 23.
Prior to his conviction in July on questionable hooliganism charges, Huseynli and his
NGO worked with the U.S. Embassy in Baku on student exchanges.
Read more here: http://en.trend.az/azerbaijan/politics/2325143.html
25. Armeniaís joining BTK rail line may be considered after settlement of
Nagorno-Karabakh conflict
Trend
October 22, 2014
The issue of Armeniaís joining the Baku-Tbilisi-Kars railway (BTK) can be considered
only after the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict, the
head of Azerbaijan Railways Arif Asgarov told reporters Oct.22.
He said that all interested parties can join the BTK project at this stage, with the
exception of Armenia. Kazakhstan and Afghanistan have already expressed their
willingness to join the project.
Read more here: http://en.trend.az/business/economy/2324766.html
26. Top NATO Commander: ëPartnership with Georgia Rock Solidí
Civil Georgia
October 22, 2014
Implementation of package of enhanced cooperation offered by NATO to Georgia at
the summit in Wales was discussed in meetings between top NATO commander,
General Philip Breedlove, and the Georgian leadership in Tbilisi on October 22,
officials said after the talks.
U.S. Air Force General Philip Breedlove, who is NATOís Supreme Allied Commander
Europe and commander of U.S. forces in Europe, met Defense Minister Irakli
Alasania and then also held talks with PM Irakli Garibashvili with participation of
other senior officials, including interior and justice ministers.
Read more here: http://civil.ge/eng/article.php?id=27734
27. European Union supported about 200 projects in Armenia
ARKA
October 22, 2014
The European Union has supported about 200 projects in Armenia implemented by
small and medium-sized enterprises by providing from 40 to 50 million euros a year,
the head of cooperation division of the EU Delegation to Armenia Hoa-Binh Adjemian
said today.
He said the projects range from agriculture, culture and international cooperation to
development of civil society and infrastructures.
Read more here:
http://arka.am/en/news/business/european_union_supported_about_200_projects_i
n_armenia/
28. EBRD plans to implement 100m euros worth projects in Armenia in 2015
ARKA
October 22, 2014
The European Bank for Reconstruction and Development (EBRD) plans to implement
100 million euros worth projects in Armenia in 2015, the head of EBRD Yerevan
Office, Mark Davis, told journalists today.
He said in 2013 the Bank had financed 75 million euros worth projects and as much
will have financed this year.
Read more here:
http://arka.am/en/news/business/ebrd_plans_to_implement_100_million_euros_wor
th_projects_in_armenia_in_2015/