Impact of Kyrgyzstan new government on exchange rates
The rich oligarchy in Kyrgyzstan are not the only ones worried about the change in government, where former President Kurmanbek Bakiyev was toppled in Apr 2010.
Forex traders were very mindful and wary too, as the currency of Kyrgyzstan Som (KGS) (Kyrgyz: сом, sometimes transliterated as “sum” or “soum”) would wildly fluctuate.
Currently, 1 US Dollar trades at 45.53 Kyrgyzstan Som and it is highly likely that the Kyrgyzstan Som would depreciate in the weeks to come due to the government instability as well as a outpour of funds from the rich oligarchy in Kyrgyzstan to safe havens like the US Dollar.
We predicted that the Kyrgyzstan Som may hit the 1 US Dollar against 50.0 Kyrgyzstan Som within the next 3 months with the same rational. Political situation in Kyrgyzstan is not expected to stabilise and chances are, the ousted President Kurmanbek Bakiyev may force his way back into power with military assistance. If that happens, a severe collapse in the Kyrgyzstan Som may lead to a big instability in the central Asia region. And we might see a more impactful collapse in Kyrgyzstan compared against the collapse of the Soviet trading block in 1990.
Kyrgyzstan is not a very rich country and the stock market capitalisation of Kyrgyzstan exchange was valued at much as $42 million in 2005 by the World Bank. Thus, regions in Europe, Americas and other part of Asia might not feel the impact from the political change in Kyrgyzstan.
For the forex traders who trades in Kyrgyzstan Som (KGS) however, it is indeed a nerving experience to keep track on the Som (KGS) exchange rate.
Not many people will trade in the Som. If you do, you would probably trade against the Chinese RMB/Kyrgyzstan Som or the Russian Rouble/Kyrgyzstan Som.
Kyrgyzstan does not have much trade with United States or Euro. Good luck to all traders. Tread carefully!
Agreed that the SOM is rarely traded. Guess we need to put in perspective that some forex traders do punt on the SOM and they might be reaping big bucks now.
Kyrgyzstan is near to China but we do not do much trade with this country.
Kyrgyzstan does not conduct trade with most countries.