The Kyrgyz National Bank reported notable developments in early 2024, showing a strong shift toward the use of national currency in foreign trade settlements between Moscow and Bishkek. In the first five months of the year, more than 95 percent of payments in bilateral trade were conducted in the Kyrgyz som and the Russian ruble, signaling a significant move away from reliance on third currencies. This trend was highlighted by a major domestic newspaper and appears to reflect broader changes in how payments are settled between the two countries.
According to the publication, the share of interstate settlements settled in national currencies rose markedly in 2023, reaching about 88 percent. This suggests a continuing pattern where both governments and financial institutions prioritize direct exchange in their own units when possible, reducing exposure to exchange rate volatility and the costs associated with currency conversion.
The Kyrgyz Foreign Ministry has stated that 2024 will see ongoing use of the som in export and import payments, reinforcing the trend observed in previous periods. This stance aligns with official efforts to strengthen monetary sovereignty and promote more predictable trade finance arrangements amid regional economic shifts.
Analysts point to several factors behind the sustained liquidity of the ruble and the Russian financial infrastructure as drivers for this preference. Igor Shestakovich, who directs the center of specialized initiatives Oy Ordo, noted that Russia has built a robust payments framework that supports efficient, transparent settlements with partner economies. The combination of ample liquidity and a mature payment system reduces the need for using foreign currencies in routine intergovernmental transactions.
The Kyrgyz Ministry of Economy observed that the rise in the use of the national currency coincides with a measurable increase in overall trade volume between Kyrgyzstan and its partners. From January to April 2024, trade activity grew by about 30 percent, a development the ministry described as a direct result of heightened confidence in som-based settlements and improved settlement channels. This environment helps exporters and importers manage risk more effectively while also strengthening bilateral economic ties.
Earlier signals from Kyrgyz authorities indicated an openness to deeper cooperation with major Russian banks. Invitations extended to large Russian financial institutions were part of a broader strategy to streamline cross-border payments, facilitate financing, and support the growth of trade flows. Such engagement aims to complement existing infrastructure and offer more options for firms operating in both markets.
In regional context, trade activity between Russia and other SCO member states has been a topic of ongoing attention. Recent discussions highlighted that the pattern of currency use in intergovernmental commerce can influence the pace of integration within the Eurasian space and the resilience of regional supply chains. The shift toward national currencies in key bilateral engagements often reflects a broader move to diversify payment methods and reduce exposure to external shocks.
Economic observers emphasize that currency choice in bilateral trade is not merely a technical detail; it affects pricing, risk management, and the competitiveness of firms operating across borders. When countries settle in their own units, it can simplify accounting, streamline audits, and potentially lower transaction costs. At the same time, policymakers remain attentive to exchange-rate dynamics and macroprudential considerations as trade patterns evolve.
For Kyrgyzstan, the trend toward som-based payments is part of a wider effort to strengthen financial sovereignty and build more predictable economic relationships with its northern neighbor. By leveraging a stable domestic currency and a compatible payment ecosystem, Kyrgyzstan aims to support local producers, offer clearer price signals to buyers, and encourage sustainable growth in cross-border commerce.
Overall, the narrative around currency use in Russia-Kyrgyzstan trade signals a careful balancing act between integrating with regional financial infrastructure and maintaining control over monetary policy. Stakeholders note that continued collaboration with banking partners, ongoing modernization of payment rails, and prudent macroeconomic management will be essential as trade volumes fluctuate and as the regional landscape continues to shift. The observed 2024 momentum offers a glimpse into how currency choice can influence practical outcomes—from liquidity management to the ease of settlement for a diverse set of exporters and importers.
As discussions proceed, the formal framework governing settlements may evolve further, with potential updates to regulatory guidance, settlement terms, and risk controls designed to support a stable, efficient, and transparent bilateral trading environment. The underlying message remains clear: for Kyrgyzstan and Russia, fostering confidence in domestic currency use strengthens economic ties and supports longer-term growth in cross-border commerce, even as global financial dynamics continue to unfold. [Citation: Kyrgyz News Agency]