TURKMENISTAN
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The new Turkmenistan manat (TMT) currency has re-invented itself from the 1990's whereby the government of the day was paying bills by printing money hereby steadily debasing the value of the former manat (TMM) currency since its currency inception in late 1993. The TMM experienced hyperinflation during its tenure. With the passing of its former eccentric cult leader President Niyazov in year 2006, the country held its first multi-candidate election since independence (year 1991) in year 2007. The new government accordingly unified the dual exchange rate system and redenominated the currency (TMT).

Turkmenistanís economic future depends heavily on the continued development of energy resources and its distribution of hydrocarbon resources via pipelines to export markets. There are now three pipeline routes to China with the most recent one becoming operational in June 2014. Other pipeline routes include Russia / Iran, India via Pakistan and the Caspian Sea export route.

POLITICS:
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ECONOMY: energy resource rich, market reforms slowly taking hold from the previous state controlled command economy model. The Turkmen economy declined massively during the 1990ís as by year 2001, the economy was only 70 percent of its 1990 level. In addition to political mismanagement and its outdated state-controlled ideology during this time, the Turkmen economy was held back with an inadequate legal system. The laws changed too frequently attributing to low investor confidence. Today, the politicians and its bureaucracy have reduced restrictions on foreign direct investment (FDI) thus helping to modernize the economy with gradual market reforms.

The economy is currently on a strong growth cycle driven by several new pipeline routes exporting hydrocarbon energy. Macro-economic variables have turned very positive over the last 2 years, tremendous wealth potential lies ahead for Turkmenistan.

The country's cotton industry is the nationís second largest, agriculture represents only 7 percent of GDP but employs half the workforce.

Oil & Natural Gas
Turkmenistan is number five in the world for natural gas reserves measured at 17.5 trillion cubic m (January 2013). Turkmenistan is now realizing significant cash flow from the energy pipelines for export.
These surplus revenues are now transferred to the State Development Bank of which are then allocated to public projects. State-run energy companies for Turkemnistan include Turkmen Gaz for natural gas and state-owned Turkmennebit for the country's oil exports via Caspian Sea route.

In April 2003, then Turkmen President Niyazov signed at 25-year natural gas contract with Russian President Putin worth an estimated $200 billion USD to Turkmenistan. The Russian buyer is large energy conglomerate Gazprom which accounted for over 60 percent of Turkmen Gaz sales prior to Chinese buying. However, with new completed pipeline routes, China will now be Turkmenistan's largest buyer of energy resources.

Economic Statistics
Total GDP as measured by purchasing power parity stands at $55 billion USD (2013) with corresponding GDP per capita at 9,700 USD. Market GDP at 40 billion USD. Year 2013 GDP growth rate at 12 percent, year 2014 projected at a continued healthy 10 percent growth. Inflation for year 2013 at 9 percent, year 2014 estimated at 8.5 percent. Very high inflation during the early to mid 1990ís with 1996 reaching 1000 percent or hyperinflation levels due to large budget deficits and an economy imploding from a temporary closure of a Russian pipeline. Fiscal surplus at 1.1 percent of GDP (2013) and estimated at plus 2 percent for year 2014. The trade & current accounts are in surplus transitioning from deficit 3 years ago. Year 2014 CA surplus projected at a strong 3.8 percent of GDP. Foreign exchange reserves including gold at $22 billion USD (December 2013).

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REGIONAL: Iran, Kazakhstan, Uzbekistan, Afghanistan
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KNOWLEDGE: The Aral Sea
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CURRENCY:
ISO Symbol ĎTMTí, Turkmen manat. At time of review on July 25, 2014, the Turkmen manat had an exchange value of 2.8503 TMT to 1 US-dollar (USD) and/or 3.838 TMT to 1 Euroland euro (EUR). The TMT follows that of a managed US-dollar peg at the 2.85 TMT to USD level. Turkmenistan introduced the original manat (TMM) after independence on November 1, 1993. The TMT manat was introduced on January 1, 2009 when it replaced the old manat currency TMM at a ratio of 5000 old manat to 1 new manat (TMT).

CURRENCY HISTORY: historical valuations include August 15, 2003 at 5,148 TMM (former ISO Symbol) to 1 USD, year 1998 at 4,890 TMM to 1 USD, January 1997 at 4,070, January 1996 at 2,400. The original manat currency was in a steady steadily free fall since inception with the black market rate reflecting a significant exchange variance price valuation compared to the official rate. The black market rate collapsed in value by 70 percent in just a few short months from 1999-2000. At inception in 1993, the exchange rate was set at 2 TMM to 1 USD, however it quickly fell to 10. In 1995, new 1000 TMM notes were issued and the smaller notes cancelled reflecting the continual debasing of the currency. Hyperinflation resulted in exchange quotes for the black market rate have the manat at over 21,000 TMM to 1 USD or upwards of four times the official rate.

CURRENCY FORECAST: favourable due to strong export revenues from energy particularly sales to China. There appears to be no depreciation pressure in near term plus the likely USD appreciation will help to maintain any appreciation pressure by the manat on the current USD peg valuation. Further, the manat is underpinned by a very strong foreign exchange reserve position.
Turkmenistan will evolve into an energy rich country resulting in higher GDP per capita figures similar to industrialized countries. The country is too rich in energy resources, its economic potential is tremendous if Turkmen has prudent leadership and sound laws.
UPDATED: July 25, 2014







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