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UPDATE 1-Tajik central bank hikes key rate to cool prices, protect currency
May 20, 2014 / 6:22 AM / 4 years ago

UPDATE 1-Tajik central bank hikes key rate to cool prices, protect currency

DUSHANBE, May 20 (Reuters) - Tajikistan’s central bank raised its main interest rate on Tuesday to rein in accelerating inflation and protect the weakening national currency, the somoni.

The bank hiked its key refinancing rate to 5.9 percent with immediate effect from the record low 4.8 percent it set on Jan. 14.

“Inflation has been accelerating for a fourth straight month, and the rate of the somoni has been declining against the dollar and euro, forcing the national bank to raise its key rate,” a central bank official told Reuters.

Inflation in Tajikistan, the poorest ex-Soviet nation, rose to 3.7 percent in January-April from 1.4 percent in the same period last year. The government expects consumer price growth to speed up to 7.5 percent this year from 3.7 percent in 2013.

The somoni has depreciated by 2.3 percent against the dollar since January.

Rising food prices are the main driver of inflation. The Central Asian nation of 8 million relies heavily on food imports, especially cereals from regional neighbour Kazakhstan.

The economy of the mountainous country, which borders China and Afghanistan, hinges on remittances from its emigrants working abroad and revenues from aluminium and cotton exports. (Reporting by Roman Kozhevnikov; Writing by Dmitry Solovyov; Editing by Kim Coghill and Hugh Lawson)

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