How decisions on the change of the refinancing rate are made?
The refinancing rate (official interest rate) is one of the instruments of the monetary policy implementation. The official interest rate implies the minimum interest rate on which the National (central) Bank lends to the banks of the second level.
The decision on the change of the refinancing rate shall be accepted by the Board of the National Bank of Tajikistan based on the suggestions of the Monetary Policy Committee of the National Bank of Tajikistan. The objective of the Committee’s activity is the coordination of the monetary and fiscal policy implementation for the efficient management of the short-term liquidity. The refinancing rate thus, plays an anchor role for the loan policy of banks and influences interest rates under deposits and credits in the money market.
An increasing of refinancing rate means tightening in the monetary policy and, as a rule, it is used to restrain monetary aggregates growth. Decreasing of refinancing rate stimulates credit activity of the banks, that promotes the money growth.
Will a market exchange rate be defined by the NBT or by market laws? If nevertheless the NBT regulates the exchange rate in the market, is it possible to consider that we follow the floating exchange rate principle?
At present in the country it is applied the regime of «adjustable floating rate without determination of its fluctuation marks». This regime assumes to set the exchange rate of currencies, exclusively on the basis of supply and demand parity in the market, testifying that exclusively market principle of its formation is used.
At the same time, the official exchange rate of Somoni to US dollar shall be defined daily on the basis of average value of average exchange rates of buying-selling transactions effected (between banks) in the inter-banking and in the intra-banking segments (between banks and their customers) of exchange market.
The National Bank of Tajikistan has the right to perform respective operations in the market (currency buying/selling) exclusively when current exchange rate is subjected to excessively sharp fluctuations.