Dollar drops below 500. Economists explain tenge’s strengthening

Tengrinews.kz - The national currency of Kazakhstan has strengthened significantly since the beginning of the year - the dollar continues to get cheaper. Economists explained what factors influence this and what the exchange rate of the American currency will be in the near future.

The official dollar exchange rate, according to the National Bank on February 13, was 501.31 tenge per dollar. In Kazakhstani exchange offices, foreign currency could be purchased at 504-505 tenge per dollar. Trading on the Kazakhstani stock exchange KASE closed at 497.95 tenge.

The tenge is strengthening following the ruble

As financial analyst Arman Beisembaev explained, the strengthening of the tenge is happening following the strengthening of the ruble. In addition, consumer activity of Kazakhstanis decreased after the New Year holidays. In December, according to the expert, consumer activity is especially high - accordingly, the demand for foreign currency grows. However, at the beginning of the year, after the holidays, the situation is different.

"People have spent their money and are now starting to save, because they need to survive until the next salary, until the first ten days of February. Until that moment, people do not have much money, they do not spend much. Because of this, companies' demand for products and services drops. Because customers simply do not have money. There is some turnover, but it is much less than before. That is why most businesses usually always plan their New Year's activity very carefully, because all businesses know that consumers will be extremely active and will spend a lot of money," said Arman Beisembaev.

Beisembaev emphasized that the exchange rate is never influenced by any one factor. It can be dominant, but not the only one. As a rule, cycles overlap each other.

Economist Andrey Chebotarev believes that further strengthening of the tenge will depend on the level to which the ruble will strengthen. He noted that the dollar is not falling, but on the contrary, is strengthening all over the world.

"Of course, the tenge is strengthening, but nothing depends on us in this case. This can be seen from the cross-rate to the ruble, it is nailed down in the region of 5.5-5.23. Right now 5.4 tenge per ruble, which shows that we could be even stronger. That is, strengthening is still possible," Chebotarev said.

The ruble, according to him, is strengthening against the backdrop of news about telephone conversations between the presidents of the United States and Russia.

"The negotiations between Washington and Moscow on ending the war are clearly taking place on the sidelines more in favor of Moscow, and against this geopolitical backdrop, the ruble is getting stronger. The ruble is getting stronger - the tenge is getting stronger. Just like the ruble was falling at the end of November - the tenge was falling. Nothing has changed, so we are in an absolutely dependent position and are simply getting stronger following the ruble, holding on to it," the economist added.

What will the dollar exchange rate be in the spring?

According to Arman Beisembaev, the tenge can be expected to strengthen not only in February, but also in the spring, and "maybe even in June."

"Today, the rate is already 497 tenge per dollar. (...) There is reason to expect the rate in the corridor of 485-474 tenge per dollar. As soon as the rate starts to enter this corridor, there is still potential for strengthening up to 458 tenge per dollar. But this is less likely," the expert said.

According to the economist, Kazakhstanis may "feel some positive" from the dollar's decline, but it is unlikely to affect prices.

"There is a ratchet effect in the economy, that is, prices that once rose due to the weakening of the national currency during the strengthening of the national currency do not fall as readily as they rise when the rate weakens. That is, yes: imports will be overpriced and will be somewhat cheaper. But you should not expect them to become much cheaper and more dramatic," Beisembaev added.

Will the situation change in summer?

In the second half of the year, with the growth of business activity and taking into account geopolitics and demand for foreign currency during the holiday season, the dollar may begin to strengthen. Experts do not rule out that during this period the American currency will cost 530-580 tenge per unit.

"In the summer, the exchange rate begins to turn in the other direction, because several factors coincide at once. Firstly, the first half of the year ends, the second begins - everyone is preparing for the autumn, when business activity is at its peak. Secondly, in the summer people usually go on vacation and go on holiday - this is usually additional demand for foreign currency. Because you start converting your income in tenge into dollars, into euros - depending on where you are going. Mostly, of course, these are dollars. Against this background, the currency market gradually begins to warm up. Now there is no such strong pressure," explained Arman Beisembaev.

Another economist Almas Chukin believes that the dollar has not become cheaper, but is simply returning to a normal level.

"520-530 - these were market fluctuations, but not market normality. What is happening now? The government, I think, has started taking new money from the National Fund, a new budget year has begun. They do not announce it right away, we will find out at the end of the month, but they have been allocated about 5 trillion for this year. And the National Fund is a dollar organization, they take dollars and sell them on the stock exchange," Almas Chukin shared his opinion.

The economist also believes that by spring Kazakhstan may return to last year's figures, when the rate was 470-490 tenge per dollar. He recalled that the Ministry of Finance included 470 tenge per dollar in the budget as the settlement rate.

Chukin also confirmed that the best period for the tenge is winter - early spring. Usually, from April-May, the tenge begins to weaken, and the reverse processes begin.

In November last year, the dollar exchange rate reached 500 tenge for the first time in Kazakhstan. Economists explained the reasons for the weakening of the national currency and the role of the National Bank in the current situation.