Russia-Ukraine conflict affects "neighbors"! The Central Asian power announced to stop exchanging currency!
March 10, 2022
With the escalation of the conflict between Russia and Ukraine, the latest news is that on March 6, local time, the French Presidential Palace stated that on the same day, French President Macron and Russian President Vladimir Putin had a phone call, and the Russian side confirmed that it will bomb the Port of Odessa.
The Port of Odessa is the largest port in Ukraine, with frequent foreign trade, and even Chinese exporters have reported that some goods are stranded at the port.
The current trade with Russia and Ukraine has been seriously affected.
Since the Russian-Ukrainian crisis, all Ukrainian ports have been closed and anchored ships cannot leave. In addition, after Maersk, MSC, CMA CGM, Hapag-Lloyd, and ONE have successively suspended operations in Russia and Ukraine, Maersk and CMA Spaceship have once again expanded the scope of business suspension, including the suspension of Belarusian business and railway and air transport related businesses.
The total capacity of these five shipping companies accounts for nearly 60% of the global market.
Transshipment stops across Europe have increased by 43 percent since February 17, according to supply chain logistics service provider FourKites, further evidence of the massive disruption to trade caused by the Russian-Ukrainian war. Delays were particularly pronounced in consumer packaged goods and food and beverages, with some European customers seeing a 55% increase in dwell time.
Box shipments to Russia fell by 17% over the same time period, and are likely to see even steeper declines as widespread sanctions and shipping companies' commercial decisions impact.
In the short term, Russian businesses and consumers are scrambling to snap up sanctions-affected goods, which will face severe shortages. In about three weeks, the number of companies withdrawing from Russia is expected to have an impact on the supply chain.
Market participants predict that supply chain woes will intensify and ocean freight rates will rise sharply.
As for the China-Europe freight trains that have attracted much attention, a small number of China-Europe freight trains will pass through Ukraine before, but all of them have been suspended. The trains passing through Russia are still running normally. The company is also maintaining communication with agents along the route and paying close attention to the relevant situation.
In addition to the Russian and Ukrainian markets, another country that is deeply affected is Kazakhstan, a major Central Asian country.
As a member of the Eurasian Economic Union, 42% of Kazakhstan's imports under the organization's framework come from Russia. Therefore, the new round of sanctions against Russia will have an impact on Kazakhstan's economy, and the devaluation of the Russian ruble will also put pressure on Kazakhstan's financial industry.
The first deputy minister of the Ministry of National Economy of Kazakhstan, Timur Zakosilikov, talked about the situation in the foreign exchange market, saying: "Now with the fluctuation of the Russian ruble exchange rate, of course, there will be a certain impact on the Kazakh economy and the tenge exchange rate. impact. But Bank Negara has taken the necessary steps.”
A spokesman for the Bank of Kazakhstan said: "If the ruble remains in this position, the tenge is likely to follow. We have the longest border with Russia, the trade volume is very large, and we are economically connected."
On February 28, local time, the Kazakhstan Financial Supervisory Authority announced that the national currency tenge was suspended from trading, and neither banks nor exchange offices provided quotations. Subsequently, major banks in Kazakhstan suspended foreign exchange business, and exchange points in cities such as the capital Nur-Sultan and Almaty suspended the purchase of US dollars.
On the morning of February 28, the dollar-to-tenge ratio was 1:496, and the tenge depreciated by 8.3% from the close of last Friday (February 25).
According to economic expert Shamsutdinov, any serious currency exchange rate fluctuations will strongly affect the purchasing power of citizens. He believes that the prices of most commodities will rise.
In 2021, Kazakhstan's top three trading partners are Russia (24.2 billion U.S. dollars in bilateral trade), China (about 18.2 billion U.S. dollars) and Italy (9.6 billion U.S. dollars).
In addition to the impact of the situation, it is also worth noting that currently, Kazakhstan is strictly investigating gray imports, believing that it has caused significant damage to domestic producers and legal importers, and also has a negative impact on the national budget. In view of this, the relevant departments have significantly strengthened customs supervision on the border with China, and in less than two months, the customs clearance and tariffs of goods have increased significantly.