The dollar is getting cheaper, the tenge is strengthening - the National Bank named the reasons

According to the head of the National Bank, recent months have shown that the tenge can remain stable without regulatory intervention. He attributed this to the balance of supply and demand in the foreign exchange market. As Timur Suleimenov noted, Kazakhstan's exports are growing, while imports remain at approximately the same level.

"Accordingly, the gap between the demand for and supply of foreign currency remains at a level that ensures exchange rate stability," the head of the National Bank noted.

Another factor, according to him, was portfolio investment by non-residents. Suleimenov explained that foreign investors are converting currency into tenge and purchasing securities.

"We see that fears of a sharp exit of non-residents from the market are not materializing. Any investment depends on conditions. If an investor sees a threat to their interests, they will, of course, leave. But as long as they see their interests are protected, they will feel comfortable in this jurisdiction. This is exactly what is happening in Kazakhstan right now," he said.

At the same time, the head of the National Bank emphasized that the share of non-residents in the market should not be overestimated:

"In terms of figures, the level of non-resident participation is about 8 percent. This figure should not be exaggerated or called enormous. It has never risen above 9 percent. In other countries at a similar level of development, these figures are higher—between 12 and 17 percent."

According to him, the National Bank welcomes portfolio investment, but is not interested in an excessive increase in its share:

"As the National Bank, we do not want this share to grow significantly. We welcome portfolio investment, but at the same time, we recognize that there are certain challenges. Therefore, if it remains around the 10 percent level, we consider that a balanced indicator," the National Bank Chairman said.

Responding to a question about future dollar dynamics, Suleimenov recalled that the National Bank does not provide forecasts; however, it currently sees no significant additional demand for foreign currency.

"Import levels remain at roughly the same values, and we are not observing any massive additional demand for currency. Therefore, based on simple economic and market analysis, the dollar exchange rate should not change significantly," he said.

The head of the National Bank also noted that the exchange rate is subject to seasonality and other market factors.

"But I will not give forecasts, as the market should provide those answers," Suleimenov concluded.

Current Exchange Rate Trends

Earlier, Timur Suleimenov was asked about forecasts from some analysts who suggested the rate could rise to 515 tenge per dollar. At the time, he stated that the National Bank saw no grounds for a sharp weakening of the tenge.

On June 5, he stated that the National Bank does not expect the tenge to weaken following the reduction of the base rate. According to him, a base rate of 17 percent maintains the attractiveness of tenge-denominated assets, so the exchange rate "will not change significantly."

In early July, we reported that the dollar had dropped by nearly 14 tenge in a week. Experts attributed the tenge's strengthening to internal factors, National Bank policy, and the inflow of non-resident funds.

Analysts cited the mandatory sale of a portion of foreign currency earnings by quasi-public sector entities, as well as the high base rate and the influx of foreign investors, as factors behind the tenge's appreciation.