Dollar in Kyrgyzstan: Answers to Current Questions
About dollars and the national currency
- In Kyrgyzstan, there is a relatively high level of dollarization in the economy, - noted the specialist from the National Bank. - Its reduction depends on both the actions of government authorities and the population. The issue is one of trust and preferences. Due to objective and subjective factors, many citizens think in dollar terms. Recently, the volume of deposits in foreign currency has increased in Kyrgyzstan because people see that the dollar is strengthening and are transferring their deposits from soms to dollars.
According to Urustemov, the main danger of a high level of dollarization is that sharp changes in the exchange rate create increased currency risks.
- For example, someone took a loan in US dollars several years ago while their income is generated in the national currency. This person assumed that there would be no significant changes over five years. But they occurred, and the borrower faced a problem. Accordingly, the bank and depositors may also encounter the same situation - the scale will expand. Therefore, such risks need to be reduced, including through lowering the level of dollarization. The NBKR is taking a number of measures in this direction. As citizens of our country, we must respect and value our national currency.
About loans
In what currency is it more advantageous to take a loan? This question raises a lot of debates and doubts. The fact is that interest rates on dollar loans are lower. At the same time, fluctuations in the exchange rate may not play in favor of the borrower. The NBKR recommends making a decision based on the primary income.
- Those who take a loan should calculate whether they will be able to repay it. When you receive a salary in one currency and take a loan in another, you are taking on currency risk. Consider how ready you are for it? If your income is generated in the national currency, it is preferable to take a loan in soms; if in foreign currency, you can take a loan in dollars. This way, you risk the least.
About savings
Another contentious issue that concerns many Kyrgyz citizens is in what currency to keep their hard-earned money? Some particularly enterprising citizens even plan to profit from currency exchange rates by timely buying and then selling significant amounts of foreign currency. However, this is not the best option.
- When there are sharp fluctuations in the exchange rate, do not rush to the exchange office to change soms for dollars and vice versa if you are not a specialist in this area, - advised Urustemov. - If your expenses are in soms, keep your money in the national currency. If you have any expenses in foreign currency, use the universal principle: "do not put all your eggs in one basket." Let part of your savings be in soms, another part in dollars, and a third part in any other currency. The exchange rate will change - you may lose in some areas and gain in others. Form your rational expectations.
About the rise of the dollar
There are rumors that by the end of this year, the already noticeably risen dollar may reach 100 soms. The expert shared his opinion on this matter.
- When I am asked whether the dollar will be 80 or 100 soms, I say that it does not matter. When we first introduced the national currency, the exchange rate was 4 soms for a dollar. Who could have thought back then that it would rise to 40 and above? The question is not what the rate will be, but how we will reach that level. If it happens smoothly and gradually, no one will feel discomfort. The task of the National Bank is to smooth out sharp fluctuations in the exchange rate, and we are working on that, - emphasized Seyilbek Urustemov.
