Kazakh banks may benefit from tenge devaluation: experts24 march 2015, 02:40
Devaluation of the tenge, Kazakhstan's national currency, may be beneficial to banks, Sergei Kozlovsky from Grand Capital shared with Tengrinews.
The head of the Analysis Department of the Russian financial firm said that banks would benefit because it could help remove excess currency from circulation since customers would buy more foreign currency. According to the expert, the only question was how to make it as painless as possible: to conduct a devaluation policy throughout the year, gradually weakening the tenge, or to effect it in one step. But n both cases the inflow of tenge to the banks will increase.
At the same time, the analyst warned that the customers who had mortgage loans in foreign currencies would be at a disadvantage, because the loans would simply become more expensive.
A senior analyst of Russian Alpari Anna Bodrova agreed that a devaluation of the tenge was likely help the banks improve their tenge liquidity. She noted that lack of liquidity in the system had been building up for from time and was preventing banks in Kazakhstan from working effectively with borrowers.
However, she added that even though the devaluation could help the banks, it would also complicate the situation with the issued loans. "Usually, with a sharp devaluation of the national currency, the volume of arrears and nonpayments on loans significantly increases," she explained.
Director of Kazakhstani Asyl-Invest Aivar Baikenov was that a devaluation of the tenge would mainly bring disadvantages. "In particular, we are talking about the risk of a significant deterioration of the banks' portfolios, that are already one of the worst in the world. It is necessary to increase confidence in the national currency now," the analyst said.
Baikenov reminded that together with the government the National Bank had developed and was implementing a series of measures to provide banks with tenge liquidity, in particular, the regulator offered short-term liquidity at 15 percent per annum. According to him, bonds were available at 8-9 percents per annum through the United Pensions Fund, which also kept some of its money in bank deposits.
Earlier, many economists, financiers and bankers expressed their opinion that Kazakhstan needed a tenge devaluation and the latter should be effected through moving from a pegged corridor to a floating exchange rate. They said that weakening the tenge was necessary in any case, and the sooner, the better. Some bankers even reported that Kazakhstanis were ready for a tenge devaluation, since both individuals and businesses kept their savings in dollars.
Reporting by Azhar Ashirova, writing by Dinara Urazova, editing by Tatyana Kuzmina