Eurasian Union to stabilize Tenge: Kazakh minister Idrissov

Representatives of diplomatic missions in Astana have complained about losses from two recent Tenge devaluations to the Minister of Foreign Affairs of Kazakhstan Yerlan Idrissov. The new Treaty establishing the Eurasian Economic Union raises concerns among the diplomats as well, a Tengrinews correspondent reports.

Kazakhstan is using managed exchange rate for its currency - the tenge. So the government effected two one-step devaluations in recent years: in 2009 by 22% and in February this year by another 18%.

Idrissov said that the volatility of the markets was a natural occurrence, since markets “are unstable, and the nature of the market is such that it always involves some changes.” He also noted that the devaluation of the Tenge “was a natural reaction to the changing economic environment outside of Kazakhstan” and it was needed in order “to adjust our economic policies to what was happening in the external markets.”

During the meeting, heads of diplomatic missions and representatives of international organizations accredited in Kazakhstan expressed their concerns over a high probability of new currency fluctuations due to the establishment of the Eurasian Economic Union. Besides, they had witnessed a series of devaluations totaling at 40% in Kazakhstan in recent years, which did not inspire much optimism in them either.

“It is not very pleasing to lose 40 percent of investments due to such fluctuations,” an opinion was heard from the foreign diplomats. So they asked the Kazakhstani minister if the Eurasian Economic Union Treaty would help ensure that "there will be no such overnight plunges of the national currency."

Yerlan Idrissov tried to assure the diplomats that the Union will help stabilize the national currency. “I do not think that there is any reason to expect the signing of the Treaty (establishing the Eurasian Union) to cause a devaluation of the Russian Ruble, Tenge or Belarusian Ruble. On the contrary, I am sure that the envisaged strengthening of our economic potential will make our currencies stronger, more stable,” he said.

Reporting by Renat Tashkinbayev, writing by Dinara Urazova, editing by Tatyana Kuzmina