Identifier
Created
Classification
Origin
08ASHGABAT60
2008-01-14 12:11:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:
TURKMENISTAN: MOVING TOWARDS A UNIFIED EXCHANGE RATE
how-toVZCZCXRO1309 PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ RUEHPW RUEHROV RUEHVK RUEHYG DE RUEHAH #0060/01 0141211 ZNR UUUUU ZZH P 141211Z JAN 08 FM AMEMBASSY ASHGABAT TO RUEHC/SECSTATE WASHDC PRIORITY 0060 INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY RUCNCIS/CIS COLLECTIVE PRIORITY RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY RUEHAK/AMEMBASSY ANKARA PRIORITY 3236 RUEHBJ/AMEMBASSY BEIJING PRIORITY 1051 RUEHKO/AMEMBASSY TOKYO PRIORITY 0922 RUEHIT/AMCONSUL ISTANBUL PRIORITY 1499 RUEKJCS/JOINT STAFF WASHDC PRIORITY RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY RUEHVEN/USMISSION USOSCE PRIORITY 2101 RUEKJCS/SECDEF WASHDC PRIORITY RUEAIIA/CIA WASHDC PRIORITY RHEHNSC/NSC WASHDC PRIORITY RHEFDIA/DIA WASHDC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 ASHGABAT 000060
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
USAID/W FOR EE/AA
E.O. 12958: N/A
TAGS: PGOV ECON EFIN TX
SUBJECT: TURKMENISTAN: MOVING TOWARDS A UNIFIED EXCHANGE RATE
REFS: A) ASHGABAT 0017
B) 07 ASHGABAT 1403
C) 0 ASHGABAT 1230
UNCLAS SECTION 01 OF 02 ASHGABAT 000060
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
USAID/W FOR EE/AA
E.O. 12958: N/A
TAGS: PGOV ECON EFIN TX
SUBJECT: TURKMENISTAN: MOVING TOWARDS A UNIFIED EXCHANGE RATE
REFS: A) ASHGABAT 0017
B) 07 ASHGABAT 1403
C) 0 ASHGABAT 1230
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: The Government continues to prohibit almost all
currency exchange operations outside of banks. Although the
"commercial" rate remains stable for cash operations, the Central
Bank of Turkmenistan has not yet issued clear instructions on what
rate foreign and domestic businesses should use for their
transactions, according to the General Manager of the National Bank
of Pakistan. If persistent rumors of unavailability of dollars
prove true, a return to a black market is most likely. As small as
it is, the private sector and the general public are skittish about
the very unclear situation, especially in light of food and other
consumer prices that have continued to rise since late 2007. END
SUMMARY.
LATEST ON THE "COMMERCIAL RATE"
3. (SBU) Two weeks after the announcement of the new exchange rate
policy on December 27, 2007, the so-called "commercial" rate (former
unofficial exchange rate) remained stable. Government-sanctioned
exchange points continue to buy U.S. dollars for 19,800 manat and
sell for 20,000 TM. Unofficial exchange booths are still closed,
and a heavier-than-usual police presence at normal exchange points
further restricts street money changers from doing business.
However, such changers manage to guardedly buy dollars at various
locations, including at major markets, at a lower rate of 19,500
manat or even 19,000 manat. The Embassy could not confirm if and at
what rate the street changers sell dollars.
4. (SBU) During a meeting with EmbOff, the National Bank of Pakistan
(NBP) General Manager Rizwan Khan said that the new commercial rate
is used only for cash operations. According to the banker, the
Central Bank of Turkmenistan (CBT) has yet to issue detailed
instructions on how, if at all, to use the commercial rate for
electronic transfers. The NBP is cautiously watching developments
and is not currently providing any cash exchange services to its
clientele.
THE OFFICIAL RATE
5. (SBU) Khan also informed the Embassy that the Central Bank of
Turkmenistan instructed the NBP to use the new official rate of
6,250 manat to the dollar for all electronic transactions. The NBP
has a broad client base among international companies and diplomatic
missions and projects, and is the only foreign bank in Turkmenistan.
(NOTE: There is also a Turkmen-Turkish joint-venture bank
operating in Turkmenistan. END NOTE.) Post had initially been told
by its bank (Vneshekonombank Bank) that it should use the commercial
rate for all wire transfers, but several days later rescinded its
decision and requested that we wait for additional instructions.
Post understands from the NBP that import/export contracts also have
to be signed using the 6,250 manat official rate. Additionally,
there are reports that businesses are unable to purchase dollars at
that rate and are forced to buy at 20,000 manat. The Presidential
Resolution announced on December 28, 2007, allows state entities to
trade dollars at the commercial rate. It is unclear at this stage,
though, whether such entities are obtaining dollars at 6,250 manat
and selling at 20,000 manat. (NOTE: The AmCit local manager for
Boeing told us January 12 that his office must use the 6,250 manat
rate. END NOTE.)
EXCHANGE POINTS
6. (SBU) The Government of Turkmenistan originally licensed 20
exchange points to do foreign exchange in Ashgabat and a total of
105 around the country. However, Khan believes that more will be
opened, but only by the authorized banks. The Embassy has been able
ASHGABAT 00000060 002 OF 002
to confirm at least one new exchange point that opened on January 9
in the Yimpash Supermarket and Shopping Mall in Ashgabat. The
Turkmen-Turkish JV Bank is operating it.
7. (SBU) COMMENT: The foreign exchange process in Turkmenistan
still raises concerns whether foreign and domestic private companies
will have access to dollars at a fair market rate. The huge
difference between the official and commercial rates may once again
lead to economic rent-seeking and corruption. Another negative
development is that the prices of staple foods continue to rise
while those who have access to dollars are getting fewer mantas in
exchange. END COMMENT.
HOAGLAND
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
USAID/W FOR EE/AA
E.O. 12958: N/A
TAGS: PGOV ECON EFIN TX
SUBJECT: TURKMENISTAN: MOVING TOWARDS A UNIFIED EXCHANGE RATE
REFS: A) ASHGABAT 0017
B) 07 ASHGABAT 1403
C) 0 ASHGABAT 1230
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: The Government continues to prohibit almost all
currency exchange operations outside of banks. Although the
"commercial" rate remains stable for cash operations, the Central
Bank of Turkmenistan has not yet issued clear instructions on what
rate foreign and domestic businesses should use for their
transactions, according to the General Manager of the National Bank
of Pakistan. If persistent rumors of unavailability of dollars
prove true, a return to a black market is most likely. As small as
it is, the private sector and the general public are skittish about
the very unclear situation, especially in light of food and other
consumer prices that have continued to rise since late 2007. END
SUMMARY.
LATEST ON THE "COMMERCIAL RATE"
3. (SBU) Two weeks after the announcement of the new exchange rate
policy on December 27, 2007, the so-called "commercial" rate (former
unofficial exchange rate) remained stable. Government-sanctioned
exchange points continue to buy U.S. dollars for 19,800 manat and
sell for 20,000 TM. Unofficial exchange booths are still closed,
and a heavier-than-usual police presence at normal exchange points
further restricts street money changers from doing business.
However, such changers manage to guardedly buy dollars at various
locations, including at major markets, at a lower rate of 19,500
manat or even 19,000 manat. The Embassy could not confirm if and at
what rate the street changers sell dollars.
4. (SBU) During a meeting with EmbOff, the National Bank of Pakistan
(NBP) General Manager Rizwan Khan said that the new commercial rate
is used only for cash operations. According to the banker, the
Central Bank of Turkmenistan (CBT) has yet to issue detailed
instructions on how, if at all, to use the commercial rate for
electronic transfers. The NBP is cautiously watching developments
and is not currently providing any cash exchange services to its
clientele.
THE OFFICIAL RATE
5. (SBU) Khan also informed the Embassy that the Central Bank of
Turkmenistan instructed the NBP to use the new official rate of
6,250 manat to the dollar for all electronic transactions. The NBP
has a broad client base among international companies and diplomatic
missions and projects, and is the only foreign bank in Turkmenistan.
(NOTE: There is also a Turkmen-Turkish joint-venture bank
operating in Turkmenistan. END NOTE.) Post had initially been told
by its bank (Vneshekonombank Bank) that it should use the commercial
rate for all wire transfers, but several days later rescinded its
decision and requested that we wait for additional instructions.
Post understands from the NBP that import/export contracts also have
to be signed using the 6,250 manat official rate. Additionally,
there are reports that businesses are unable to purchase dollars at
that rate and are forced to buy at 20,000 manat. The Presidential
Resolution announced on December 28, 2007, allows state entities to
trade dollars at the commercial rate. It is unclear at this stage,
though, whether such entities are obtaining dollars at 6,250 manat
and selling at 20,000 manat. (NOTE: The AmCit local manager for
Boeing told us January 12 that his office must use the 6,250 manat
rate. END NOTE.)
EXCHANGE POINTS
6. (SBU) The Government of Turkmenistan originally licensed 20
exchange points to do foreign exchange in Ashgabat and a total of
105 around the country. However, Khan believes that more will be
opened, but only by the authorized banks. The Embassy has been able
ASHGABAT 00000060 002 OF 002
to confirm at least one new exchange point that opened on January 9
in the Yimpash Supermarket and Shopping Mall in Ashgabat. The
Turkmen-Turkish JV Bank is operating it.
7. (SBU) COMMENT: The foreign exchange process in Turkmenistan
still raises concerns whether foreign and domestic private companies
will have access to dollars at a fair market rate. The huge
difference between the official and commercial rates may once again
lead to economic rent-seeking and corruption. Another negative
development is that the prices of staple foods continue to rise
while those who have access to dollars are getting fewer mantas in
exchange. END COMMENT.
HOAGLAND