OCT. 30 2014 (The Conway Bulletin) – Uzbekistan’s sum currency lost 20% of its value over a few days because of the depreciation of the Rouble, Russian media reported quoting a Central Bank official. Economists have warned of a ripple effect across Central Asia from the worsening Russian economy.
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(News report from Issue No. 207, published on Nov. 5 2014)
OCT. 17 2014 (The Conway Bulletin) – With the rouble under increased pressure it has become likely, analysts have said, that the Kazakh government will devalue its currency for the second time this year.
Halyk Bank placed the tenge on a negative watch. The report, no longer available on the website of Halyk’s Financial Department, said the tenge would be around 210/$1 by the end of the year compared to 183/$1 currently. That’s a drop of around 10%.
“In the last three days conditions in Tenge-denominated money markets deteriorated sharply,” Halyk Bank wrote.
“Such changes usually happen before devaluations: demonetization, declining demand for Tenge- denominated assets, the rising cost of holding Tenge mirrored by the rising costs of borrowing, all illustrating a loss of confidence and the deepening of the currency crisis.”
Sabit Khakimzhanov, head of research at Halyk Bank and author of the report, attributed the weakening of the tenge to rising interest rates, rouble trouble, and oil prices below $95 per barrel.
The note will have irritated the Kazakh Central Bank which has been denying that it is planning a second devaluation of its currency. Khakimzhanov said that, unusually, an unnamed party had been buying $200m worth of tenge every day. This, analysts suspected, was the Central Bank trying to shore up its currency.
And, rather mysteriously, a few days after it was put up on its website, the currency note disappeared. Analysts at Halyk Bank told the Conway Bulletin that it was a management decision to take down its report.
Earlier this year, the government devalued the tenge overnight by 20%.
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(News report from Issue No. 205, published on Oct. 22 2014)
OCT. 9 2014 (The Conway Bulletin) – Kazakh economy minister Yerbolat Dossayev refuted speculation the Central Bank was planning to devalue the tenge again this year, media reported. Kazakhstan’s economy has stalled since sanctions started to bite Russia. Kazakhstan has already devalued its currency by 20%.
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(News report from Issue No. 204, published on Oct. 15 2014)
OCT. 31 2014 (The Conway Bulletin) – A 40% drop in the value of the rouble this year is placing extreme pressure on Russia’s main trade partners, including Kazakhstan, experts have said.
Banking analysts have said that it is increasingly likely the Kazakh Central Bank will have to follow the rouble and devalue its own tenge currency for the second time this year.
The Tengrinews website quoted Raimbek Batalov, director at Raimbek Group, as saying that the fluctuating value of the tenge was hurting exporters. Kazakh goods are now far too expensive for their main export market — Russia.
And reports have emerged from across Kazakhstan that people are rushing to banks to sell their tenge before an imminent devaluation.
Falling oil prices and sanctions imposed by the West have pressured the rouble while the Kazakh Central Bank has insisted on keeping the tenge pegged to the US dollar since its 20% devaluation in February.
Luca Anceschi, professor of Central Asian Studies at the University of Glasgow explained that the rouble was introduced in 1993 to reduce Kazakhstan’s dependency on the rouble. Instead, he said, the opposite has happened.
“The policies pursued since 1993, if anything, have de facto re-established such dependency,” he said.
Increased economic integration with the Eurasian Economic Union gives Kazakh President Nursultan Nazarbayev even less room to manoeuvre.
A second devaluation, to keep pace with Russia’s currency slide, must be approaching fast despite the Central Bank’s denials.
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(News report from Issue No. 207, published on Nov. 5 2014)
SEPT. 25 2014 (The Conway Bulletin) – Kazakhstan will issue a US dollar denominated bond later this year, its first since 2000, Reuters reported. Government officials have launched a roadshow to drum up support for the debt issue. These are difficult times, though, because of the knock-on effect of sanctions on Russia.
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(News report from Issue No. 202, published on Oct. 1 2014)
SEPT. 9 2014 (The Conway Bulletin) – Kazakhstan’s Central Bank said that it would ban domestic banks from keeping most of its cash overseas from next year.
The announcement is another move aimed at strengthening the local banking sector.
Kairat Kelimbetov, the Central Bank chief, said that banks currently kept most of their assets in foreign currency, undermining the tenge.
“We have taken appropriate action. Firstly, limiting the ability to work with derivative financial instruments at 30 per cent on the balance. Roughly speaking, not allowing to play with currency derivatives,” he said, according to the media.
One of the biggest challenges facing the Kazakh Central Bank currently is trying to stop a slide in the value of the tenge. It has already had to devalue the national currency by 20% earlier this year and has come under sustained pressure to devalue again.
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(News report from Issue No. 199, published on Sept. 10 2014)
AUG. 28 2014 (The Conway Bulletin) – Reports from the regions said that queues up to a kilometre-long have been forming outside petrol stations as motorist try to re-fuel their cars.
In the northern city of Uralsk only four of 11 petrol stations were serving motorists without vouchers.
A combination of low refining capacity while upgrades are made; the devaluation of the tenge currency, which has made imports more expensive; restrictions on the quantity of imports have reduced petrol supplies.
Officials have said that they are working to bring the situation under control but frustrations threaten to bubble over.
Kazakh President Nursultan Nazrbayev relies, to some degree, on the people becoming increasingly rich and comfortable for his popularity. If this starts to reduce, or become visibly impaired, his popularity may drop.
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(News report from Issue No. 198, published on Sept. 3 2014)
Petrol shortages have worsened in Kazakhstan over the past few months.
JUNE 16 2014 (The Conway Bulletin) – Inflation in Kyrgyzstan will almost certainly double this year to around 8%, Tolkun Abdygulov, head of the Central Bank, said. Increasing inflation could agitate people in Kyrgyzstan. Mr Abdygulov also said that the Central Bank had spent $198m trying to prop up the Kyrgyz national currency.
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(News report from Issue No. 189, published on June 18 2014)
JUNE 2 2014 (The Conway Bulletin) -Rumours of another devaluation of the tenge triggered a spike in demand for dollars, media reported. The buying of dollars forced Kazakh Central Bank chief Kairat Kelimbetov to step in and deny that another tenge devaluation was planned. Kazakhstan devalued the tenge by 20% earlier this year.
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(News report from Issue No. 187, published on JUNE 4 2014)
MAY 8 2014 (The Conway Bulletin) – For the third year in a row, Kazakhstan’s Central Bank won the award for the best-designed new banknote. This year a new yellow and brown 1,000 tenge note commemorating the historical warrior leader Kultegin won the prize. Kazakhstan views the award as a way of boosting its international status.
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(News report from Issue No. 184, published on May 14 2014)