February 5, 2020 / 9:40 AM / 14 days ago

Tajik central bank says no grounds for somoni depreciation

DUSHANBE, Feb 5 (Reuters) - Tajikistan’s central bank considers the local somoni currency undervalued and sees no grounds for its depreciation, a senior policymaker said on Wednesday, despite reported foreign currency shortages in the Central Asian nation.

The IMF last month encouraged the Dushanbe authorities to allow greater exchange rate flexibility, implying that they should allow the somoni to weaken.

But Jamoliddin Nuraliev, first deputy central bank governor, said the bank considered the current exchange rate sustainable.

“We have all the economic calculations and grounds for the current exchange rate,” he said, adding that allowing depreciation would go against the central bank’s target of keeping inflation in check.

The IMF expects Tajikistan’s current account deficit to widen to 5.2% of gross domestic product this year, from last year’s estimated 4.5%.

A deterioration in the former Soviet republic’s economic indicators or government finances could be of concern to the holders of its $500 million Eurobonds issued in 2017. (Reporting by Nazarali Pirnazarov; Writing by Olzhas Auyezov; Editing by Alex Richardson)

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