TURKMENISTAN DEVALUES THE EURO

C O N F I D E N T I A L ASHGABAT 000574 SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB TREASURY FOR LANIER/BAKER E.O. 12958: DECL: 05/06/2018 TAGS: PGOV PREL ECON EFIN SOCI TX SUBJECT: TURKMENISTAN DEVALUES THE EURO REF: ASHGABAT 0551 Classified By: CHARGE SYLVIA REED CURRAN FOR REASONS 1.4 (B) AND (D). ¶1. (C) Europa House Coordinator Emilio Valli told EmbOffs May 4 that Turkmenistan has recently devalued the euro 30% in relation to the Turkmenistan manat. He explained this was done in order to prevent people from further profiting on a difference between the European and Turkmenistan euro/dollar rates that existed as Turkmenistan was devaluing the dollar step-by-step prior to the local currency rate unification on May 1 (reftel). (NOTE: Unlike with the dollar, there has never been a dual official and "unofficial" exchange rate for the euro in Turkmenistan. END NOTE.) Valli revealed that just as people are limited in the amount of dollars they can exchange at any one time (currently $100),the Turkmenistan government has limited the amount of euros he can transfer into his local National Bank of Pakistan account. When he first arrived earlier this year, he was told he could only transfer 50,000 euros/month for the first three months and would have to wait an additional four months before putting more into the account. Thereafter, he would be limited to depositing, at most, 5,000 euros/month. Due to the deposit restrictions imposed, he decided to bring the start up money for Europa House with him in cash. ¶2. (C) COMMENT: Most expert observers agree the manat is overvalued against the dollar and euro alike. While the more sophisticated of Ashgabat's residents are beginning to favor euros, the familiar dollar remains the foreign currency of choice. The price street traders are giving for dollars is 15,000 manat/dollar (official rate is 14,250/dollar). Rumors are rife that the government will sooner or later devalue the manat and bring it closer to its real value. No one seems to know exactly what that real value may be, with some people feeling it could return to its 2007 "unofficial rate" value of 24,000 or even go higher. In the meantime, local residents are showing they have more confidence in the dollar than the manat. At 7:00am on May 6, EmbOff, while out jogging, found a line around the block of local residents waiting to enter a bank to exchange their manat for dollars. END COMMENT. CURRAN