Depreciation of tenge contributes to de-dollarization of Kazakh-Russian trade: opinion23 november 2015, 14:34
The depreciation of the Kazakh tenge can help abandon the US dollar in the bilateral trade between Kazakhstan and Russia, Russian economist Mikhail Khazin told Tengrinews.
Khazin views de-dollarization of Kazakh-Russian trade relations as a natural process. Before the latest spiral of depreciation of the Kazakh tenge started on August 20 this year, this process had been hindered by the overvaluation of the tenge against the ruble. According to him, de-dollarization of the mutual trade was impossible when the Russian currency was depreciated and the Kazakh tenge stayed pinned. "Now that the currencies are at parity, de-dollarization is quite possible,” Khazin said.
Governor of the National Bank of Kazakhstan Daniyar Akishev recently declared that parity between the tenge and the ruble had been achieved. "The present exchange rate corresponds with the current external factors, i.e. the current price of oil, the Russian ruble exchange rate, the situation in the Russian and the Chinese economy," Akishev said.
Since the ruble and the tenge are at parity now, the trade will no longer be conducted in US dollars, Khazin said. Currently, only small firms trade without using the US dollar. Major contracts are still denominated in the US currency, but this situation may change, Khazing says. According to him, de-dollarization of bilateral trade between Kazakhstan and Russia will reduce the trade costs for both economies. “We must create our own system of the division of labor and pricing. If we abandon the dollar peg, we will change the price structure. The price structure will change only slightly at first, but in time, it will change completely and in accordance with the domestic demand and domestic production; and this is certainly a positive development, since it will reduce the costs for the domestic economic system,” Khazin said.
Senior analyst of Alpari agency Vadim Iosub, however, is skeptical about the possibility of de-dollarization of the mutual trade between Russia and Kazakhstan. According to Iosub, use of soft national currencies could have increased in the first half of 2014. Whereas the currency rate volatility escalation in the second half of 2015 led to an increase of payments in hard currencies rather then a decrease. "Member states of the EAEU have declared their goal to increase the share of national currencies in trade, but this goal is difficult to achieve if such a high volatility persists in the markets. The desired goal can be achieved only after stabilization of the national currencies and renunciation of intentional or unintentional currency wars,” the expert said.
The economist noted that the currency structure of transactions between Kazakhstan and Russia was not transparent enough, but was probably similar to the currency structure of the trade within the EAEU. "According to the Eurasian Economic Commission, in 2013 it [the currency structure of trade] looked like this: 50 percent in Russian rubles, 40 percent – in US dollars, 8-9 - in Euros, and about 1 percent in other national currencies,” Iosub said, adding that the percentage of trade between Kazakhstan and Russia made in tenge did not exceed 1-2 percent. Russia, in his opinion, was more interested in increasing the share of payments in rubles rather than in tenge.
By Indira Urazova, editing by Tatyana Kuzmina