Baku, Azerbaijan, Oct. 17
By Elena Kosolapova - Trend:
Kazakh "Halyk Finance" investment bank experts predict the fall of Kazakhstan's national currency - tenge by late 2014.
"We are changing our forecast on the exchange rate as of late 2014 in anticipation of the forthcoming devaluation from USD / KZT = 183.2 to USD / KZT = 210," Mmdaily bank's report said Oct. 17.
The conditions on the Kazakh monetary market sharply deteriorated and such a situation occurs on the eve of the devaluation, the report says.
"All indices testify to demonetization, loss of market confidence in tenge and currency crisis intensification," the report says.
An average daily overnight repo rate reached 24.3 percent, but in some transactions - 40 percent. One-day currency swap market closed at 26.1 percent. The non-deliverable forward (NDF) exceeded 13 percent (compared to nine percent two days earlier), while weekly reached 23 percent. However, the tenge rate to the dollar increased up to 181.50, while a trading volume tripled compared to the trend, the report says.
During the morning session on Oct.16 and Oct.17, a major participant sold nearly $620 million according to the estimations of the bank experts, despite the fact that the exchange rate ranged from 181.50-181.55 tenge per dollar. This major participant in fact was the only seller. The total trading volume amounted to $ 632 million during the two sessions. The exchange rate on Oct.17 equaled 181.52 USD/KZT.
"Deterioration of conditions in the money market shows that the majority of market participants have almost fully optimized liquidity in tenge and are now ready every day to keep the liquidity position at the level of 26 percent per annum in order to avoid currency risks," the report said.
Despite the growth of rates, the volume of currency swap market has increased by around 50 percent compared to the trend, according to the document.
The forecasts of bank analysts about the possible future devaluation of the exchange rate of tenge are based on both fundamental reasons and the low credibility of the exchange rate policy.
"Fundamentally, the reserve on the February devaluation "melted" after the wage increase in spring and decrease of the ruble in summer and fall, and after the decrease of oil prices tenge became overrated," the statement said.
However, the pressure on the rate was sensitive even when tenge was still underestimated, namely in spring and summer, according to the report.
"Unwillingness to actively create rates on the money market at levels that make speculative positions unprofitable is the direct cause of low confidence for the exchange rate policy," the report of Halyk Finance said.
The last devaluation of national currency in Kazakhstan was held in February 2014. Then the dollar rose by 19 percent in relation to the tenge.
Halyk Finance is the leading Kazakh investment bank focused on Central Asia, which operates since 2004. The sole shareholder of the bank is Halyk Bank of Kazakhstan.
Halyk Bank of Kazakhstan JSC is the leading financial group and the retail bank in Kazakhstan with the largest customer base and the largest branch network. The main shareholder of the bank is ALMEX Holding Group JSC.