Capital outflow to neighboring Russia totaled $11 billion in 2014 due to efforts to maintain tenge exchange rate

Efforts of the country's Central Bank to maintain the tenge exchange rate against the US Dollar within a set currency band resulted in $11 billion outflowing to the neighboring Russia in 2014 alone.

That was the statement made by Ms. Umyt Shayakhmetova, Head of Halyk Bank, one of the largest lenders in Kazakhstan, at a press-conference in Almaty September 3.

“Thus, our national economy was financing Russia’s economy. And the part of the country’s FX and gold reserves spent earlier to maintain the tenge exchange rate [before the decision was taken August 20 to let the tenge float freely] was actually spent to bolster Russia’s economy”, she emphasized.

According to her, the 26% currency devaluation following the decision to let the tenge float freely, was a right solution. “Maybe, the measure should have been taken earlier (…)”, she said, adding that in the wake of the currency devaluation, the daily purchase of the Russian rouble at the Bank’s branches, had dropped from 1 billion roubles to 300 million roubles.

August 20 the country’s President Nursultan Nazarbayev said that the measures to maintain the set tenge exchange rate in 2014-2015 had cost a total of $28 billion, with $10 billion spent in 2015.