Tajik migrants’ dollars. How does the somoni-dollar exchange rate depend on migrants’ money and the ruble exchange rate?
7 months ago Web Desk 0
On November 24, 2020, the official exchange rate for 1 dollar was 11.30 somoni; while in the beginning of November, it was 10.32 somoni. This is explained by the fact that on November 4, the National Bank of Tajikistan carried out a sharp correction of the official exchange rate of the national currency to 11.3 somoni per dollar.
This is not the first correction. On March 20, the regulator changed the official somoni-dollar exchange rate by 5% at once. Thus, considering the latest correction, the Tajik currency devaluated by 16.6% since the beginning of the year: from 9.69 somoni per dollar on January 1 to 11.3 somoni per dollar on November 4, 2020.
The National Bank considers an increase in demand for American currency, a negative balance of foreign trade turnover and a decrease in the flow of remittances and foreign investments to the republic as the main reasons for the devaluation of somoni.
The demand for foreign currency is traditionally high. Primarily, because the annual export volume is 2.5-3 times less than the import volume, according to the Agency on Statistics of Tajikistan. In 2019, exports amounted to $1.175 billion and imports exceeded $3.3 billion.
According to the National Bank, the daily foreign exchange deficit in Tajikistan is $8-25 million depending on the season.
We should note that, according to the National Bank and the Agency on Statistics, the trade turnover of Tajikistan over the years of independence of the republic remained negative, that is, the imports always prevail over exports.
During 10 years (2009-2019), the volume of exported products amounted to $12.1 billion, and imported – $36.4 billion.
The deficit of the American currency (for importing products, servicing external debt and other needs) is compensated by migrants’ remittances, which annually account for 20%-50% of the country’s GDP. According to various sources, about 70% of households in the republic make their living with labour migrants’ money. Remittances also provide 75% of the currency for the import of goods and products.
What Do the Migrants Have to Do With It?
In fact, Tajikistan’s economy is highly dependent on the remittances of labour migrants. According to the World Bank, the country is one of the three most dependent on migrants’ remittances countries in the world.
The ratio of migrants’ remittances to GDP fell below 30% only twice over 10 years: in 2015 and 2016. In 2013, their volume amounted to almost half of the GDP.
Despite the fact that the ratio of remittances to GDP slightly decreased over the past five years, they still account for more than a third of the republic’s economy.
Source: Asia Plus