Despite Devaluation, Turkmenistan Economy Outperforms Its Neighbors

Posted by ETFalpha ⋅ January 10, 2015 ⋅ Leave a comment

Filed Under Devaluation, Economy, Energy, FM, Frontier Markets, Oil, Turkmen President Gurbanguly Berdymukhamedov, Turkmenistan

By Casey Michel

Presidential Palace Ashgabat Turkmenistan

The Presidential Palace in Ashgabat. Source: Wikipedia.

While certain actors in Central Asia rang in 2015 with welcome news, others decided to greet the New Year by continuing the trend of downward economic trajectories. In a surprise move, Turkmenistan began 2015 by devaluing its currency approximately 20 percent, dropping the manta-to-dollar rate from 2.85 to 3.5 on Jan. 1.

According to Bloomberg, the devaluation was Turkmenistan’s first in nearly seven years – and leaves a dent in Turkmenistan’s claims of isolation and stability amidst the region’s downturn. Turkmen President Gurbanguly Berdymukhamedov has led a concerted effort at slowly opening Turkmenistan over the past few months, if only in comparison to his isolationist predecessor – but last week’s devaluation was likely not what he had in mind.

That said, the devaluation may not be entirely without potential benefit. In running down the possible reasons for the move, EurasiaNet’s Chris Rickleton examines gains from the drop. “Another possibility is that the government devalued the manat strategically to help the country diversify trade,” Rickleton wrote. “…With the ruble so low compared with the manat, Turkmenistan’s few exports to Russia were uncompetitive.”