Plan to mitigate devaluation in Kazakhstan presented by Khudaibergenov, Ushbayev

February has become a ripening season for devaluation rumors in Kazakhstan. The Central Asian economy experienced a 22% devaluation of its national currency - the tenge - in February 2009 and then a one-step 19% devaluation of its currency last year, also in February.

At the moment, in February 2015, pressures on the tenge keep on growing. There are the negative dynamics in the much larger economy of the neighbouring Russia, including the troubles with its ruble that has seen an 80% devaluation in six months, the plummeting global oil prices and Kazakhstan’s own structural problems in the financial sector burdened by bad loans and the overall high debt ratio in the country. With oil and gas being the primary revenue generating products that feed and propel the Kazakhstan economy, the power of persuasion of the Kazakh governmental officials is not enough to calm down the general public and businessmen.

Kazakhstan's national currency - the tenge - is maintained within the corridor of 185 tenge per dollar +3/-15 tenge. It is de facto pegged to a multi-currency basket (10% ruble, 20% euro, 70% dollar), which means that the Russian ruble depreciation puts a downward pressure on the tenge. Moreover, Russia is Kazakhstan’s major trade partner responsible for 36% of its trade turnover. The two share a huge border of nearly 7000 km and both countries rely heavily on exporting hydrocarbons.

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Tenge CIS devaluation economy finance Kazakh Kazakhstan National Bank news ruble Central Asia