VZCZCXRO1066
PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN
RUEHLZ RUEHNEH RUEHPW RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHAH #0431/01 0970454
ZNR UUUUU ZZH
P 070454Z APR 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 2602
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 5041
RUEHBJ/AMEMBASSY BEIJING PRIORITY 2794
RUEHKO/AMEMBASSY TOKYO PRIORITY 2659
RUEHIT/AMCONSUL ISTANBUL PRIORITY 3285
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
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RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 ASHGABAT 000431 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
 
E.O. 12958: N/A 
TAGS: ECON PGOV SOCI EFIN TX
SUBJECT: TURKMENISTAN: DOLLARS NOT WANTED 
 
REFS: A) 08 ASHGABAT 17; B) 08 ASHGABAT 60; C) 08 ASHGABAT 485; C) 
08 ASHGABAT 551 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2. (SBU) SUMMARY:  Problems exchanging US dollars for Turkmen manat 
have been observed for the past week, due to the rumors that the 
Government plans to depreciate the official exchange rate to an even 
one manat for one dollar. (NOTE: The current rate is 2.84 DTM 
(Denominated Turkmen Manat) per one US Dollar. END NOTE.)  It is 
unclear what is causing this problem, although there may be a 
shortage of new banknotes.  There is no proof of an impending 
devaluation.  Currency exchange points are overcrowded with long 
lines of people waiting to convert their saved dollars into manats. 
Some private vendors have stopped accepting dollars for payment. 
END SUMMARY. 
 
¶3. (SBU) Rumors spread at the end of March that the Government would 
set a new exchange rate of one US dollar equal to one DTM effective 
April 1st.  The local population, who experienced the overnight 
depreciation of the dollar last spring, tend to believe word of 
mouth rather than the government's silence regarding its exchange 
policy.  As a result, those who prefer to keep their savings in 
cash, "under their mattresses," rushed to the exchange points to 
change dollars before their value "collapsed."  People with 
thousands of dollars in cash were observed at the exchange points 
wishing to get rid of their dollars.  According to post's local 
staff who visited the exchange points, at some locations they were 
not able to actually exchange dollars because of the long lines, 
while at some smaller exchange points, like the one at Yimpash Trade 
Center, belonging to the Turkmen Turkish JV Bank, there was an 
exchange limit of 50 dollars per customer. 
 
¶4.  (SBU) An Embassy contact at the Forex Department of the Central 
Bank of Turkmenistan said that no changes in the exchange rate are 
anticipated.  Nonetheless, bankers are apparently not sure 
themselves of the government's exchange policy and also prefer to be 
on the safe side by exchanging their dollar savings into manats. 
The chairwoman of a provincial bank said that she opted to exchange 
all her dollars that she had saved for her daughter's college 
education into manats.  "Of course, I will loose fifty or hundred 
dollars when I buy the dollars back if the exchange rate remains the 
same, but that is still better then losing thousands if the rate 
falls" the Chairwoman said. 
 
¶5.  (SBU) Even the private traders and small businesses that need 
dollars for trading goods from Turkey, China and UAE have not been 
buying dollars, but as all others rushed to exchange their dollars 
to manats.  The "Bedew" shopkeepers (the line of shops supplying 
construction materials, plumbing fixtures, and home appliances 
located on the outskirts of Ashgabat), retailers at the "Tolkuchka" 
bazaar as well as most of the private kiosks and mini-markets around 
Ashgabat have been refusing to accept dollars for payment from 
customers.  Some Embassy local staff confirmed that they couldn't 
pay dollars for the shopping they regularly do at any of these 
places for the past week.  The vendors were asking for payments in 
manat cash only, although previously they used to accept dollars. 
 
 
¶6.  (SBU) The depreciation has also been observed at the so-called 
"Daiza-Bank" (NOTE: "Daiza" means "aunt" in Turkmen; a common way to 
address an older woman.  Daiza-Bank, refers to the money changers 
standing on the sidewalks, most of whom are women dressed in 
traditional Turkmen national dress.  END NOTE.)  The Daiza-Bank's 
rate dropped from 2.85 (which used to be higher then the official 
rate of 2.84) to 2.60 DTMs per dollar during March 31 to April 2, 
then increased back to 2.80.  People who didn't want to stand in 
long lines at the exchange points, had no other option but to sell 
dollars at a lower rate at Daiza Bank. 
 
¶7.  (SBU) COMMENT:  It's not clear what's causing the long lines at 
the exchange points, and there is no concrete proof of an impending 
devaluation.  We've also heard that as the old manat banknotes are 
 
ASHGABAT 00000431  002 OF 002 
 
 
being withdrawn from circulation and destroyed, not enough new 
banknotes have been put into circulation to make up the difference, 
creating a manat shortage.  In fact, one contact saw bags of new 
banknotes being off-loaded on one international flight (They are 
printed in the UK.)  Still, many people remember what happened to 
their savings last year when the opaque government policy on foreign 
exchange and the forex rate unification resulted in overnight 
depreciation of the dollar, with many ordinary people losing out as 
a result (reftels).  While ordinary citizens try to save their 
under-the-mattress savings, the Daiza Bank appears to be gaining the 
most from this forex game.  END COMMENT. 
 
MILES