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. Last Updated: 07/27/2016

Turkmen Currency Devalued by 95%

ASHGABAT, Turkmenistan -- Turkmenistan has slashed the value of its manat currency to bring the commercial exchange rate more closely into line with black market rates, officials and diplomats said Tuesday.

They said the manat was pegged at 230 per dollar, down from an old official rate of 10 per dollar and a commercial rate of 75, in line with a proclamation by President Saparmurat Niyazov.

The new rate is near last week's Ashgabat street rate of 250.

At the same time, the commercial rate offered by state banks and the largely-disused official rate were unified.

Using International Monetary Fund methods, Turkmenistan has devalued its currency by 95.65 percent from the previous official rate and by 67.39 percent from the old commercial rate.

Five Turkmen banks have been licensed to sell the currency at the new rate, with $1.8 million changing hands in the first week of officially sanctioned trading.

One Western diplomat said individuals were allowed to buy up to $500 at the new rate, but may only do so in denominations of $100 due to a scarcity of dollar bills.

The devaluation appeared to have halted street trading in the manat, which was launched in October 1993 at two to the dollar but which has since been undermined by galloping inflation in this Central Asian state of just over four million people.

The government gives free gas, electricity and water to its citizens, who earn an average 1,000 manat a month ($4.35 at the new rate). Basic foodstuffs are available at very low prices for ration coupons. Bread costs just 20 manat per kilogram -- under a cent.

The diplomat said the subsidies were funded by printing money. The government doubled state salaries in June, and there is speculation that a further pay hike of up to 500 percent will be made in January, the diplomat said.

The Turkmen manat is by far the weakest of the new currencies launched by the states of Central Asia after the collapse of the Soviet Union in 1991.