Moldova Confronts Currency, Graft Crises

The Moldovan central bank has intervened to prop up national currency leu at the urging of Moldovan Prime Minister Valeriu Strelet to “take all necessary measures” to slow a seven month decline in the leu’s value. The central bank has raised the national interest rate to 19.5 percent, a jump of two percent. Moldovan central bank chief Dorin Gragutanu stated that the move was necessary to combat the downturn in the Russian economy, a fall in remittances from Russia as well as “weak economic activity” in the EU. Inflation has also been on the rise and could reach 11.5 percent this year.

Adding to the country’s currency crisis, the country is reportedly facing a nationwide baking crisis and the largest anti-corruption protests in Moldovan history are being held in Chisinau, the country’s capital. More than 60,000 Moldovans have taken to the streets in order to protest the disappearance of more than $1 billion – roughly an eighth of the country’s GDP – from the national treasury. The protests have entered their second week and show no signs of abating. The central bank’s actions have been interpreted by some as a way to prevent the protests from gaining further momentum.

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News Briefs:

  • The Kazakh tenge bounced back following the Kazakh central bank’s intervention to curb its decline. Bloomberg reports that the rise constitutes the largest of its kind in more than three weeks, bringing the currency up to 270.5 per dollar.
  • Pakistani Prime Minister Nawaz Sharif announced late last week that Turkmenistan will soon begin construction on the much-discussed TAPI pipeline. The pipeline is expected to stretch across Central Asia and into Pakistan, providing the company much needed relief for ongoing energy shortages.  The pipeline has been in the works for more than a decade and it is unclear what progress will actually be made.
  • Kashmir-region separatists called for a general strike in the Himalayan region on Wednesday. The calls for a strike led to most of the city being shut down and came about as a result of the killing of three Kashmiri men by government forces. Kashmiri separatist group Hizbul Mujahideen has alleged that the men were tortured and killed in custody while Indian officials claim they were killed in a clash with government forces. The men were found with torture marks on their bodies.
  • Swedish-Finnish telecoms giant TeliaSonera announced that it is closing its operations in Central Asia after years of scandals related to bribes paid to Gulnara Karimova, the first daughter of Uzbekistan. The company stated that it will close its operations in Kazakhstan, Azerbaijan, Georgia, Moldova and Tajikistan, in addition to Uzbekistan. The company most notably drew attention for using Karimova as an intermediary by which it made payments to Uzbek government officials.

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