The National Bank of Kyrgyz Republic has announced that it will now include the Chinese yuan in its list of foreign currencies with daily published exchange rates. Starting from September 1, the central bank will determine and publish the rate of the Chinese Renminbi Yuan (RMB) against Kyrgyzstan’s official currency, the Kyrgyz Som. Currently, only the exchange rates for the euro, Kazakhstani tenge, Russian ruble, and U.S. dollar are published daily, while other foreign currencies have weekly rates.
Local media in Kyrgyzstan view this move as a way to introduce more Chinese yuan into their official circulation. It is predicted that this decision will facilitate more trade and enhance economic ties with China. The reports suggest that increased Chinese investment will help stabilize Kyrgyzstan’s financial system.
China is currently Kyrgyzstan’s largest trading partner. The country heavily relies on Chinese imports and has a significant trading deficit with China. In fact, public data shows that in the first quarter of this year alone, Chinese exports to Kyrgyzstan totaled $4.163 billion while only $22 million worth of goods and services were exported from Kyrgyzstan to China.
Kyrgyzstan’s trade volume with China is double that of its trade with Russia-dominated Eurasian Economic Union countries such as Russia itself, Kazakhstan, Armenia, and Belarus.
Experts believe that this decision by Kyrgyzstan aligns with China’s efforts to increase its influence in Central Asia through economic means. By promoting the use of the Chinese yuan in trade and financial activities within Central Asian countries like Kyrgyzstan, China can dominate these economies to a greater extent.
Kyrgyzstan is an important region for China’s Belt and Road Initiative (BRI), which aims to recreate ancient trading routes between Asia and Europe through infrastructure projects funded by China. However, concerns have been raised about BRI setting debt traps for participating countries.
Despite being indebted to China for large infrastructure loans already received and signing agreements for further projects under BRI like building railways connecting Uzbekistan and Kazakhstan earlier this year; experts suggest that maintaining a balance between Russia and China remains crucial for Kyrgystan due to security concerns tied closely with Russia while also benefiting economically from cooperation with both nations.
Overall though it seems clear from recent decisions made by their central bank regarding currency exchange rates; they remain open-minded towards international business opportunities which could potentially benefit their economy moving forward.