The dollar surged upwards today, creating new lows for both the Kazakh tenge and the Russian ruble since the 1998 Asian financial crisis. News of further economic slowing in China caused Brent crude oil benchmark prices to decline almost 2.5% to nearly $31, its lowest point in twelve years. As both countries’ main exports are tied to hydrocarbons and oil and gas products, their currencies’ values are coupled closely with the changing value of worldwide oil benchmarks. China’s slowing demand for energy in general lends further credence to widespread market fears that there is a huge oversupply, but most producers are attempting to hold out and keep their wells operating for as long as possible.
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- Kyrgyzstan has once again halted negotiations with Centerra Gold, the Canadian firm in charge of the Kumtor gold mine. The two entities have been engaged in talks for almost two years, with varying degrees of swapping stakes between Centerra’s threat to pull out its resources and expertise as well as Kyrgyz nationalists attempting to nationalize the mine.
- Kyrgyz President Almazbek Atambaev said that Russia is backing out of a deal to finance two hydroelectric power plants, estimated to be worth over $3.2 billion. Atambaev said the difficulties were due to macroeconomic factors, citing “Russia’s economy is not on the rise and the oil price trend is negative,” and added he brought up the issue with President Vladimir Putin during a visit to Moscow.
- The World Bank’s Global Economic Prospects report maintains that Turkmenistan will maintain its position as one of the top growth economies of 2015 and into 2016. According to the report, the Turkmen economy grew by some 8.5% in 2015 and will continue growing by 8.9% in 2016-2017. It holds the position of the top supplier of natural gas to both Iran and China, despite the drop off in prices over the past year. The IMF’s report was also similarly optimistic – despite the difficulties presented last week when Gazprom announced it would no longer be re-exporting Turkmen gas, a major blow to the short-term outlook of the economy.
Strained relations between Russia and Turkey have had a decidedly negative impact on any prospects of cooperation either economically or diplomatically – while the premier collaboration project, the South Stream pipeline, has already been cancelled, the downing of the Russian jet headed for Syrian airspace has proven to be the death knell in slowly improving relations. Turkey’s position in Central Asia lags far behind that of Russia and China, but the fissures between the two may create opportunities for Turkmenistan and Azerbaijan to cooperate with them to export to the EU, a turn of events that EU Energy Commissioner Marcos Sefcovic has been advocating for several years.