VZCZCXRO4710
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ
RUEHPW RUEHROV RUEHVK RUEHYG
DE RUEHAH #0017/01 0041212
ZNR UUUUU ZZH
P 041212Z JAN 08
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9999
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 3200
RUEHBJ/AMEMBASSY BEIJING 1015
RUEHKO/AMEMBASSY TOKYO 0889
RUEHIT/AMCONSUL ISTANBUL 1463
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHVEN/USMISSION USOSCE 2075

UNCLAS SECTION 01 OF 02 ASHGABAT 000017 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
AID/W FOR AA/EE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EFIN TX
SUBJECT:  TURKMENISTAN:  EXCHANGE BOOTHS OPEN IN BANKS; 
UNOFFICIAL EXCHANGE POINTS CLOSED 
 
REF: 07 ASHGABAT 1403 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  True to the president's word, all 
unofficial currency exchange outlets shut down on January 2. 
While the Central Bank Chairman promised a sufficient supply 
of dollars to the public, according to anecdotal evidence, 
this is already not the case.  The government also stated 
that new measures aimed at slowly unifying the rate would 
keep living costs affordable, but this also does not appear 
to be true.  This cable incldes first impressions of the 
impact of the official bank exchange booths, and we will 
continue to monitor the situation.  END SUMMARY. 
 
"UNOFFICIAL" RATE NOW CALLED "COMMERCIAL" RATE 
 
¶3.  (U) President Berdimuhamedov announced on December 27 in 
the decree "On Issues of Improving Turkmenistan's Foreign 
Currency Operations" that the government of Turkmenistan 
would open 105 exchange offices in banks throughout the 
country on January 2 (reftel).  Reasons given for this decree 
include "orderly circulation of foreign currency in 
(Turkmenistan's) economy, strengthening control over it, 
creating favorable conditions for transition towards a 
unified exchange rate...as well as increasing international 
economic activity and attracting foreign financial 
investments."  The Central Bank also said that this decree 
would ensure moderate housing, food, and imported medicine 
prices for the public. 
 
UNOFFICIAL CURRENCY EXCHANGE BOOTHS CLOSED 
 
¶4.  (SBU) On January 2, the unofficial currency exchange 
houses operating near Embassy Ashgabat were closed.  Police 
are noticeably present at bazaars and at the department store 
near the Embassy, places that commonly offered currency 
exchange at the unofficial rate.  An Embassy employee noticed 
that individuals still quietly engaged in currency exchange 
at one of the local bazaars, however, and did not witness any 
arrests. 
 
NOW THE EMBASSY CAN EXCHANGE MONEY, TOO 
 
¶5.  (SBU) Vnesheconombank informed Embassy Ashgabat that it 
can convert funds for the U.S. government at the new 
"commercial" -- in the old vernacular, "unofficial" -- rate 
of 19,800 manat per dollar.  For the first time, the Embassy 
will offer currency exchange services, and at the same rate 
that is available at the official exchange outlets. 
 
"OFFICIAL" RATE STILL "OFFICIAL," BUT PURPOSE UNCLEAR 
 
¶6.  (U) The "official" rate is now fixed at 6,250 for $1. 
However, we are still unable to identify who or which 
entities are obliged to use this rate, and in which 
circumstances.  Before January 1, this rate was 5,200 manat 
for $1. 
 
PRACTICAL EXPERIENCES DIFFER FROM PRESIDENT'S PROMISES 
 
¶7.  (SBU) During an explanation of changes in currency 
exchange procedures on television on December 28, Central 
Bank Chairman Geldimyrat Abylov stated that enough currency 
to satisfy everyone's needs would be available.  However, one 
Embassy employee heard that a cashier at a bank exchange 
booth told someone that he could only exchange $20, and then 
told the next person that he could exchange $50.  This could 
be evidence that bribing at currency exchange booths may 
already be underway.  Embassy personnel easily exchanged 
dollars for manat, but did not receive a receipt for the 
 
ASHGABAT 00000017  002 OF 002 
 
 
exchange. 
 
¶8.  (SBU) COMMENT:  While we do not yet know if the closure 
of the unofficial booths is permanent, some locals feel that 
the unofficial exchange houses will remain closed if the new 
exchange offices operate well and satisfy everyone's needs. 
The system shows significant weaknesses already, so it is 
probably only a matter of time before a real black market 
emerges.  Meanwhile, the changing exchange rates affect 
prices.  On January 4, the Embassy Travel learned that 
Turkmenistan Airlines ticket prices are going up by 20 
percent because of the change of the official exchange rate. 
Contrary to the Central Bank's intentions, prices for other 
goods and services continue to rise as well, and locals do 
not expect a reversal of that trend.  END COMMENT. 
HOAGLAND