Tajikistan’s central bank is adopting measures to close all money exchange points as the national currency is driven further to the verge of collapse.
The government order, which is to be published this week, will allow only authorized banks to effect currency exchanges, which will also be limited in amount.
The move is expected to drive money-sellers undergroud and force businesses desperate for cash to rely on an unregulated black market.
The National Bank of Tajikistan has said that its analyses have shown that bureaux de change are speculative hiking rates and profiting from market instability.
It said in a statement that six people have been detained in Dushanbe for allegedly rigging rates, prompting the closure of all the country’s 1,400 exchange offices.
Buying and selling foreign denomination, which is typically dollars in Tajikistan, outside the authorized points will incur criminal prosecution for all parties involved.
“Private person, businessmen, traders and legal entities, enterprises, organizations, companies, trading houses that wish to acquire foreign currencies must go to credit organizations that are able and have to right to provide them with that foreign currency,” the central bank said in a statement on November 30.
The bank noted that similar measures were adopted last December and in January, April and May this year.
Around 800 bureaux de change have been shut down by the government and later re-registered to credit organizations in recent months, the central bank said.
“But despite that, there has been irresponsibility and an improper control by credit organizations over currency exchange points. The employees of currency exchanges took advantage of that and, as the fraudsters that they are, without any justification hiked dollar rate artificially, making big earnings in the process,” the central bank statement said.
The Tajik somoni has, as of December 1, reached 7.6 against the dollar, according to Asia-Plus website, up from 7 somoni last week. That is sharply up from January first, when the dollar was selling for 5.3 somoni, according to official figures.
And while it is possible to buy somoni, it has long been virtually impossible to sell the somoni in exchange for dollars.
Even buying somoni at the authorized points will be complicated. After the government order is published, it will be possible to buy only up to 14,000 somoni without producing identification, such as a passport.
CA-News reported that commentators on social media were reacting with concern to the measures.
“Banks will happily take dollars, but they won’t sell. Or you will buy from them and sell on the black market,” said one commentator cited by CA-News. “Businessmen need cash to buy their goods in Turkey, China and other countries. Accordingly, if there is no cash in the banks, you buy from friends and family, but at black market rates.”
In a paper published in July, Nozim Ishankulov, a board member of the Tajikistan Free Market Center, warned of similar consequences to an earlier wave of exchange restrictions.
“The foreign exchange restrictions in place have a big drawback, which is that they lead to the emergence of a black market on which any amount of money can be bought and sold, thus circumventing official restrictions and violating law,” Ishankulov wrote.
Along with other central banks in the region, Tajikistan’s ultimate lender has dipped into its reserves to halt the decline, looting what was already a light coffer. It should come as no surprise the national bank has refused multiple media requests to divulge how much remains in its war chest, although it is broadly assumed the figure is getting ever closer to zero, despite cash injections from China.
The current management of the national bank was installed in May to replace officials that had failed to stem the fall of the somoni. That appeared to do the job, but only until the end of October.
Ishankulov in July urged longer term solutions than mere personnel changes.
“The falling exchange rate of Tajikistan’s national currency is a reflection of the general state of the country’s economy, which is burdened by bureaucracy and corruption,” he wrote. “To solve this gridlock, difficult and painful reforms must be carried out. These include deregulation, privatization, and liberalization aimed at improving the investment climate.”