China’s recent 1.8% devaluation of the yuang triggered a 2.3% drop in the Russian ruble and lowered the global price of oil to below $50 a barrel. The devaluation has worsened the value of the slumping ruble, the results of which have been described in mixed terms by China-Russia analysts. While some allege that the immediate impact could lead to tensions between Moscow and its largest trading partner in Beijing, others have been quick to point out that an uptick in the Chinese economy would almost certainly equal growth in the Russian economy and a potential increase in the ruble’s value.
The Chinese are not expected to stop at a 1.8% devaluation and could devalue the currency beyond 5% if the initial influx of capital proves unsuccessful. The move, described by one analyst as “China’s version of quantitative easing,” is intended to revive China’s export industry, which has decreased by 8.3% since last year. The Kremlin has yet to issue a statement regarding the devaluation but has assured analysts that the slide in the ruble’s value will not prove damaging due to its own “control over the currency market.”
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- The Financial Times reports on illegal credit institutions in Iran. Such institutions are attractive options to affluent Iranians as they are unbridled by Iranian central bank supervision and can offer much higher interest rates than those offered by traditional Iranian banking or credit institutions. The FT article alleges that they are nonetheless damaging to the Iranian economy and pose an obstacle to the government as it prepares to open to a flood of foreign investment. For instance, illegal credit institutions force Iran’s 30 commercial banks to raise interest rates on deposits in order to remain competitive. Given that they are traditionally linked to politically influential individuals, it may prove difficult to eliminate them completely.
- Russian state media outlet TASS reports that the Ukrainian military has assembled nearly 100 armored vehicles along a military contact line in Donbas. A spokesman for the self-proclaimed republic of Donetsk also stated that the movements of armored vehicles in the region constitute a violation of the February Minsk accord agreed to by the Ukrainian military.
- A Tajik opposition politician has been given an additional three years of prison time for reasons that appear to be politically charged. The politician, Zaid Saidov, was jailed in December 2013 for charges of bribery, rape and polygamy, charges widely disputed by human rights and democracy activists. The Tajik state prosecutors initially attempted to add 25 years to his sentence on new charges of forgery, embezzlement and tax evasion, but were unable to do so. Saidov will now serve a total of 29 years in prison.
- Kyrgyzstan has at last become a full member of the Eurasian Economic Union. A ceremony marking its entrance into the regional economic body was held near Lake Issyk-Kul in northern Kyrgyzstan. The ceremony was attended by both the Kyrgyz and Kazakh presidents.
- The International Monetary Fund raised its growth forecast for Kazakhstan to 3.25% in 2016. The basis for the increase in its growth forecast is the expected rise in global oil prices and greater external demand for oil abroad. The raise is a welcome piece of good news for the Kazakh economy, which has struggled over the last 18 months due to a combination of economic and internal factors provoked by stagnation in the development of its oil and gas projects and a significant downturn in the Russian economy.