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National Bank able to maintain tenge exchange rate for at least one year: expert

07 august 2014, 19:02
©Yaroslav Radlovsky
©Yaroslav Radlovsky

Devaluation of Kazakhstan’s national currency is discussed almost everywhere in Kazakhstan: in shops, in banks, in the kitchens and on the streets. There was a snap devaluation of the tenge in February, which led to a 19% depreciation of the currency, and rumors about repeated devaluation have been resurfacing ever since. But none of them have turned into reality so far.

Tengrinews correspondent asked several experts about the risks related to the Kazakh national currency. And all of them seem to agree that there will be no significant fluctuations in the tenge exchange rate in the near future. 

CEO of Freedom Finance investment company Timur Turlov believes Kazakhstan will be able to maintain a stable rate of the tenge for at least a year. He does not see any prerequisites for a speculative attack on the tenge. “Tenge is undervalued even against the ruble, not to mention against the basket of currencies of the countries similar to Kazakhstan. Macroeconomic situation in Kazakhstan is better than in most of its neighbors,” he said. The expert claims that no further weakening of the tenge should occur unless that are some “super shocks”.

“I would rather advise converting dollar deposits into tenge: the interest rate on them is much higher, and the risk of weakening during the year is very low. Its [tenge’s] fluctuations will depend on oil prices and the situation in Russia. However, most probably the tenge will not go over 185 (per $1). If things continue developing as they are now, then the dollar to tenge rate will be pegged to 182-183 (tenge per $1). The exchange rate might reach 175 (tenge per $1) if the Russian ruble strengthens significantly against the backdrop of lifted sanctions, for example," the speaker said.

Senior analyst of Alpari Anna Bodrova stressed that back in February 2014, when the tenge was devalued, the volume of the market interventions made by the National Bank of Kazakhstan amounted to an average of $2.2 billion dollars. In this context she pointed out that in April and May, there were almost no such interventions, and in June, the macroeconomic situation was also generally stable and did not require any intense regulation. "Interventions were resumed in July, their average volume during the month may have reached $500 million," Bodrova said. However, she stressed that the National Bank of Kazakhstan had the means to control the exchange rate, since it had sufficient funds.

In turn, the head of Asyl Invest analytics department Aivar Baikenov believes that the National Bank will be able to keep the tenge per dollar rate as long as the tenge per ruble exchange rate does not go below five (tenge per ruble). "If any issues arise, like the exchange rate of the ruble against the dollar falling to 37-38 and the tenge per ruble - below five, then the speculation driven by devaluation expectations will grow stronger and it will become even harder (for the central bank of Kazakhstan) to maintain the tenge rate," he said. Nevertheless, the current oil prices give place for manoeuvring, the analyst pointed out.

To date, one dollar is sold for 182 tenge at the Kazakhstan Stock Exchange (KASE). Some experts predict that this rate may even change to 181.6 later this week.

Last week, adviser to the head of the National Bank of Kazakhstan Olzhas Khudaibergenov said that the fall in the dollar rate against the tenge at KASE was the result of National Bank’s interventions. "This is driven by the Bank’s goal to demonstrate that it is in control of the market," he explained.

Reporting by Azhar Ashirova, writing by Dinara Urazova

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