Central Bank Governor on tenge prospects18 november 2015, 15:36
Kazakhstan’s Central bank Governor Daniyar Akishev at a sitting in the Astana-based Akorda President’s Palace today promised not to allow drastic changes of the tenge exchange rate.
This morning’s trades at the Kazakhstan Stock Exchange closed at 307.68 tenge per USD 1.
“The current exchange rate is being shaped at the Stock Exchange with no involvement of the Central Bank. The exchange rate reflects the current external factors such as the exchange rate of the Russia’s rouble and the current state of the Russia’s and China’s economies (…) the probability of any significant changes of the exchange rate is not very high. Most of negative scenarios have already rolled out. The global price for oil has dropped twice. The Russia’s rouble has depreciated. The probability of the the external factors getting worse is pretty low”, Mr. Akishev said.
According to him, the Central Bank is not going to intervene with the trend. “Should the oil price fall below $40 per barrel, the tenge exchange rate might be corrected (…) However, we will not allow any sharp and destabilizing changes of the tenge, be it towards depreciation or appreciation”.
“When it comes to the inflation rate. This year the inflation rate is likely to be higher than the planned 6-8%. As of the end of October, the indicator already stands at 9.4%. The rate was lower than 5% before August 2015, mostly thanks to shrinking money supply and shrinking lending. Our task is to make sure the inflation rate is stable and bring it down to 6-8% in 2016. The Bank and the Government plan to do a lot to get back to the planned level”, he summed up.
Back in September and October 2015 the Bank steered away from the approach announced August 20 [to shift from the fixed currency band to the free float exchange rate] and resorted to sales of FX in the domestic market. “The share of the Central Bank in the FX market [in these two months] reached 60%. Out of the National Oil Fund [accumulating windfall oil revenues] and gold and FX reserves of the National Bank a total of over $5 billion was sold at the FX market to balance the tenge exchange rate”.
To keep the gold and FX reserves intact, the Central Bank decided to minimize its participation in the country’s FX market starting from November 5, 2015. “This measure is in line with the earlier announced policy, that is the free gloat mode and inflation targeting”, the press–release read November 5.
From August 20 the National Bank and the Government decided to implement a new monetary policy based on inflation targeting and to renounce the earlier practiced currency corridor.
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.