Economics

What is the Currency of Kyrgyzstan?

The official currency of Kyrgyzstan is the Kyrgyzstani som.

Kyrgyzstan is a landlocked nation in Central Asia. In ancient times, the mountainous country was used as a popular trade route by European and Asian merchants. The famous trade network referred to as the Silk Route passed through the country’s rugged terrain. The traders mainly practiced barter trade. After several territorial changes and domination by regional powers, Kyrgyzstan joined the Soviet Union on December 5th, 1936. Under the Soviet Union, Kyrgyzstan’s economy and social status greatly improved. The country adopted the Soviet ruble as its official legal tender.

Soviet Ruble

The Soviet ruble was the official currency used by all members of the Soviet Union. The currency was produced by the Federal State Unitary Enterprise. Although all 15 members of the Soviet Union shared a common currency, each had a local name for the ruble. One ruble was equivalent to 100 kopeks. The currency came in the form of coins and banknotes. Certain coins produced in the early 20th century were made of 90% gold or 90% silver. The Soviet ruble was freely used in all the states of the Soviet Union. The use of a single currency led to increased trade within the Soviet Union. However, the Soviet ruble went through seven revaluations between 1917 and 1991. One such revaluation was done immediately after the end of World War II. This process, in which the new ruble replaced ten old rubles, was needed to reduce the amount of currency in circulation. The revaluations led to a significant loss of wealth for the citizens of the Soviet Union. The ruble remained in circulation within the Soviet Union even after the breakup of the Union in 1991. In 1993, Russia stopped circulating the Soviet ruble. The National Bank of Kyrgyzstan took up the role of minting and issuing currency in Kyrgyzstan after the Soviet Union ruble ceased circulation.

Kyrgyzstani Som

On May 10, 1993, Kyrgyzstan adopted the Kyrgyzstani som as its new currency. The Kyrgyzstani som is broken up into 100 tyiyn, and its name means "pure" in the Kyrgyz language. It referred to the pure gold used in the early forms of Kyrgyzstan currency. The currency was initially issued in the form of banknotes, with an exchange rate of 1 som to 200 Soviet rubles. The economy of Kyrgyzstan was immensely affected by the breakup of the Soviet Union, namely because the nation lost a significant market for its products after the dissolution.

Som Coins

The country did not produce coins until 2008 when demand for the coins intensified, as small scale traders needed the coins for their transactions. Brass-coated steel coins were the first coins to be released to the public in denominations of 10 and 50 tiyin. Nickel-coated 1, 3 and 5, som coins were also issued in the same year. In today’s economy, coins are hardly used in any transactions in Kyrgyzstan, as high rates of inflation have led to the loss of value of the coins.

Security Concerns

Due to the risk of counterfeit notes, in 2009 the National Bank of Kyrgyzstan issued new banknotes in denominations of 20, 50 and 100 som. The newly issued banknotes had improved features which made them more difficult to counterfeit. The bank also released a new banknote worth 5000 Som.

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