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Kazakhstan’s future is closely linked to Russia and China: Kazakhstan’s Central Bank Governor

18 september 2013, 00:26
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©REUTERS
©REUTERS
September 2 Kazakhstan pegged its national currency, the tenge, to a multi-currency basket, rather than to the US Dollar. The US Dollar accounts for 70% of the basket, with the Euro being responsible for another 20% and the Russian rouble for the rest 10%. Starting from next year Kazakhstan plans to introduce a floating corridor and define the level of the Central Bank’s interventions for the boundaries of the corridor to be extended, Kazakhstan’s Central Bank Governor Gregory Marchenko told in an interview for Russia’s Prime.

The regulator believes the new mechanism will enable to gradually decrease the role of the US Dollar in the internal FX market and in the country’s foreign trade as well as to mitigate speculative activities in the market.
“We have announced the multi-currency basket so that common people and economic entities could get used to the fact that the tenge shouldn’t be measured against the US Dollar alone. The problem is 92% of all payments related to foreign trade are denominated in the US Dollar”, Mr. Marchenko said.

“Given the geographic coverage of Kazakhstan’s exports, there’s no room for the US Dollar in the basket. Europe is responsible or 50% of Kazakhstan’s exports, followed by Russia and China”, according to him.

“Next year we plan to introduce a so-called operational corridor coupled with mandatory currency interventions. The scheme will be similar to that of Russia”, Mr. Marchenko said. Russia’s Central Bank has been practicing currency interventions to mitigate fluctuations of the rouble against a certain multi-currency basket. There’s a certain level of fluctuations set for the Central Bank to resort to interventions.

Mr. Marchenko elaborated that in the future Kazakhstan’s Central Bank may integrate China’s renminbi into the currency basket if the Chinese currency is more actively used in mutual settlements.

“The timing for the corridor and the exact breakdown of currencies in the basket are not defined yet. We’ll get back to these issues next year”, he said.

“China’s renminbi has been strengthening in the recent years. (…) those investing into renminbi are in a better position now than those investing into (…) the US Dollar. Kazakhstan’s future is closely linked to Russia and China. These countries’ currencies are to play a greater role in Kazakhstan’s foreign trade as compared to the role of the US Dollar”, Mr. Marchenko summed up.

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