December 14, 2017 / 7:18 AM / 2 years ago

Turkmenistan tightens fx regulations as black market flourishes

ASHGABAT, Dec 14 (Reuters) - Gas exporter Turkmenistan has tightened foreign exchange regulations, according to state-run banks, in a fresh sign that the foreign currency shortage may be worsening in the Central Asian former Soviet republic.

Following a drop in gas exports, it has become impossible for ordinary Turkmen to buy cash foreign currency at the official exchange rate of 3.5 manat per dollar.

On the black market, the dollar trades at 9.3-9.5 manat, up from 8.2-8.5 manat in early November.

Some locals have started using bank cards as a workaround, transferring money from their local currency cards to Visa cards - those transactions are done at the official exchange rate - and cashing the latter while abroad.

But cashiers at two Turkmen state-owned banks told a Reuters correspondent this week that the monthly limit on such transfers has now been halved to $500.

In a similar move last month, banks in Turkmenistan have limited daily cash withdrawals from MasterCard and Visa cards to $50 and other payments to $200.

Some bank customers had initially suspected that Visa Inc itself had imposed the new restrictions, but the payments company’s press office said in a statement it was working with Turkmen banks as usual. It declined to disclose the volume of Turkmen transactions.

Turkmenistan’s hard currency revenue has fallen sharply since Russia halted imports of its gas in 2016, leaving China as the main buyer. Beijing’s payments are likely to be significantly offset by repayments of Turkmen debt to China.

The isolated desert nation maintains a fixed exchange rate system. It devalued the manat by 19 percent in early 2015. (Reporting by Marat Gurt; Additional reporting by Nazarali Pirnazarov in Dushanbe; Writing by Olzhas Auyezov; Editing by Amrutha Gayathri)

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