Russia’s invasion of Ukraine and the Western sanctions in response have left former Soviet states in Central Asia facing economic chaos. Since Vladimir Putin launched his war on February 24, the ruble has collapsed by 50 percent with no bottom in sight. Russia has enacted currency controls reminiscent of the early 1990s and telegraphed plans to default on foreign debtholders.
The uncertainty is gripping Central Asia, where Russia is a top trading partner and the source of critical remittances. Local currencies rise and fall with the ruble.
In short, Central Asia’s economies are highly exposed to Russia.
Kazakhstan was the first to respond to the crisis, raising its baseline interest rate from 10.25 percent to 13.5 percent just hours after the war began. The National Bank rapidly intervened in the currency market, selling U.S. dollars to protect the tenge.
Nur-Sultan also announced a new anti-crisis plan promising further…