In 2024, geopolitical turbulence remained at a high level, which contributed to significant fluctuations in global commodity and raw materials markets. However, despite the processes putting pressure on the Kyrgyz economy, the National Bank was able to maintain the stability of the national currency and keep inflation within the target corridor.

Throughout 2024, the KGS demonstrated a steady dynamics of strengthening against the US dollar. If in December 2023 the exchange rate was at the level of 89 KGS per dollar, by the end of 2024 it decreased to 87 KGS (-2.34% for the year).

The KGS showed the most significant growth in the middle of the year, when the dollar exchange rate fell to 84.74 KGS. However, excessive strengthening of the national currency would negatively affect exporters, so the regulator intervened, smoothing out fluctuations.

Against the backdrop of world currencies under pressure from global economic factors, the KGS has shown enviable resilience.

"External factors had a significant impact on the KGS exchange rate formation in 2024. The instability of the global economy, destruction of logistics chains intensified this influence. Of particular importance is the fact that about 80-82 per cent of Kyrgyzstan's goods are imports. Therefore, the National Bank had to maintain a balance between KGS support and dollar depreciation throughout the year,’ said Tolonbek Abdyrov, head of the Department of Economics and Management at the International University of Kyrgyzstan, Doctor of Economics, Professor.

The stable exchange rate has helped limit price increases for imported goods, which make up a significant part of the consumer basket. The National Bank managed to keep price dynamics within the target range: annual inflation in December 2024 was 6.3%. This is within the established corridor of 5-7% and indicates an effective monetary policy, despite the external inflationary background and high domestic demand.

In order to ensure price stability and maintain stability of the national currency, the National Bank used the whole range of monetary instruments. Among other things, it actively conducted currency interventions, regulating market imbalances and levelling speculative pressure on the KGS exchange rate.

A total of 26 interventions were carried out during the year, the total volume of the NBKR currency in circulation on the interbank market was $1bn 45.5m: 13 interventions ($675.65 m) were aimed at selling currency and 13 at buying ($369.85m) currency, this smoothed sharp currency hikes.

"Additionally: the bank used the mechanism of regulating the base interest rate, balancing the money supply in the economy. This allowed it to manage the level of liquidity, reducing the risk of inflationary processes accelerating. In conditions of high level of import dependence (80-82% of all goods), maintaining a stable exchange rate played a critical role in preventing price shocks and maintaining macroeconomic stability,’ noted Professor Tolonbek Abdyrov.

An important measure was the development of long-term funding instruments, including the issuance of government securities and strengthening the financial sector by supporting bank liquidity. The regulator also continued to work on improving financial inclusion, which contributed to the growth of investment activity and financial sector sustainability.

"The National Bank's policy in 2024 contributed to minimising external risks by ensuring predictability of macroeconomic indicators. Under the conditions of peak load on payment of external public debt (up to $500 million per year), coordinated actions of the regulator allowed to avoid significant currency fluctuations and contain inflationary pressure’, - said Tolonbek Abdyrov.

He added that the successful management of foreign exchange reserves provided an additional safety cushion for the economy.

The forecast for 2025 assumes the continuation of a similar approach in monetary policy, given the high degree of dependence on imported supplies and persistent global economic challenges.

‘Most likely, the National Bank will continue to use key instruments to maintain financial stability and macroeconomic equilibrium, paying special attention to diversification of reserves and improving the effectiveness of monetary regulation,’ the expert concluded.

In this context, an important direction will be the modernisation of financial infrastructure and strengthening control over systemic risks, which will strengthen investor confidence and increase the resilience of the national economy to external shocks.