The Foreign Exchange Market Between Shymkent Kazakhstan vs Ferghana Uzbekistan

In 1994, Kazakhstan, Uzbekistan enrolled in a common economic union which was mandated to oversee the free movement of labor and capital in the two countries. In 1994, Kazakhstan and Uzbekistan enrolled in a common economic association which aimed at enabling the coordination of economic policies among the two countries. However, due to the authoritarian governments in both countries, there has been multiple security threats at the border which has led to destabilizing the economy of both countries. Recent clashes at the border between Tajikistan and Kyrgyzstan have resurfaced the calamities and hostilities that exist at the border (Euler, n.d) Despite of the stringent policies at pertaining to border policy, the local people in Uzbekistan have embraced cross-border economic interaction and competition over scarce resources especially water, agricultural and pasture land.

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Kazakhstan majorly exports agricultural products, raw materials, chemical products as well as manufactured goods. Additionally, it also exports lead, zinc as well as other precious metals. Economic growth has deteriorated in the country. The slow economic growth in the country has slowed down the economic fundamentals and increased risks. The KZT has continued to remain volatile and down at all times. The sharp drop of the KZT is what has led to the increase in inflation of 17.6percent in 2016 (Geopolitika). Uzbekistan distant itself from Russia and tried regional alliances.

Shymkent city has a population of about 629,000. At present, its purchasing power parity of $184.4 billion. Uzbekistan on the other hand has a purchasing power parity (GDP) of approximately $187.9billion as of the year 015. Ferghana GDP per capita income is $1800 while the real GDP growth is 7.2.percent (Country Assessments and Performance Measures). The weak monetary policy of Shymkent has exposed the country into a compromising state especially in its exchange rate. Ferghana Uzbekistan on the other hand has continuously experienced disruptions of trading agreements. The slow pace of economic growth in the country prompted the need to undertake reforms. The reforms adopted include enhanced international financial cooperation, surge in privatization as well as creation of an enabling platform for foreign investors.

References

Euler Hermes. Kazakhstan. Retrieved from http://www.eulerhermes.com/economic-research/country-reports/Pages/Kazakhstan.aspx

Geopolitika - Borders in the Fergana Valley: an inevitable source of conflict? (n.d.). Retrieved from http://www.geopolitika.lt/?artc=6497II.

Country Assessments and Performance Measures - Uzbekistan. (n.d.). Retrieved from https://2009-2017.state.gov/p/eur/rls/rpt/92795.htm

Kazakhstan tough times for the tenge | OSW. (n.d.). Retrieved from https://www.osw.waw.pl/en/publikacje/analyses/2015-08-26/kazakhstan-tough-times-tenge

Uzbekistan facts, information, pictures | Encyclopedia.com articles about Uzbekistan. (n.d.). Retrieved from http://www.encyclopedia.com/places/commonwealth-independent-states-and-baltic-nations/cis-and-baltic-political-geography-109

Uzbekistan GDP (purchasing power parity) - Economy. (n.d.). Retrieved from http://www.indexmundi.com/uzbekistan/gdp_(purchasing_power_parity).html