Warning shot

The communist faction in Kazakhstan’s legislature proposes to require the central bank to give advance notice of a devaluation of the tenge so that people can prepare.

The communists are justly famous for bad ideas, but this has got to be one of their 10 worst.  Suppose that the National Bank announces, on January 1, that it will weaken the tenge to 200 per United States dollar on March 1.  Speculators will immediately cash in their tenge while they are worth something (roughly 180 to the dollar at present), selling tenge for dollars.  This will drain the Bank’s dollar reserves, which are its only means of protecting the value of the tenge in the last resort.  The Bank will have to devalue to 200 on January 2.  So much for advance notice.

The Majilis would be more sensible to require the Bank to issue, in plain language, monthly reports of the state of the economy.  –Leon Taylor tayloralmaty@gmail.com

Reference

Zarina Karymova.  Kommunisti predlagaut preduprezdat’ nacelenie o deval’vatsii zaranee.  [The communists propose warning the population about devaluation in advance.]  Panorama.  November 14, 2014.