Official: Oil prices favorably influencing Kazakhstan’s national currency rate

Business Materials 10 June 2020 17:53 (UTC +04:00)
Official: Oil prices favorably influencing Kazakhstan’s national currency rate

BAKU, Azerbaijan, Jun. 10

By Nargiz Sadikhova – Trend:

The recovery of oil prices continues to be the main factor favorably influencing Kazakhstan’s national currency (tenge) rates after an unprecedented shock in March, Deputy Governor of the National Bank Aliya Moldabekova said, Trend reports with reference to the National Bank.

“Energy prices showed an increase against the background of a gradual restoration of balance at the oil market. Saudi Arabia announced an additional reduction in oil production in June by 1 million barrels per day to encourage oil-producing countries to fulfill obligations to reduce production. The number of drilling rigs in the US continued to decline in May and fell to 222, a record number in 10 years. Quotations for oil rose in May by 40 percent from $25.3 to $35.3 per barrel,” Moldabekova said.

She said that amid rising oil prices and the positive changes in currency rates of Kazakhstan's trading partners, the tenge rate strengthened from 429.41 to 411.54 tenge per US dollar or by 4.2 percent over the month.

“Significant influence on the national currency rate in May was also provided by a number of internal factors,” she said.

Firstly, an increase in the currency sale from the National Fund for transfers to the budget as part of an increase in the total guaranteed transfer for 2020 from 2.7 trillion tenge ($6.7 billion) up to 4.7 trillion tenge ($11.9 billion).

Secondly, the sale of foreign currency by exporters for quarterly tax deductions. But, she said, despite the fact that May is the so-called ‘tax’ month, the sales volume of exporters declined somewhat, which is due to the fact that a significant drop in oil in March and a low average oil price in April have a negative effect.

Thirdly, the decrease in demand for foreign currency due to the extension of quarantine measures and the still limited operation of many enterprises.

“Kazakhstan Stock Exchange trading volume fell to a minimum for the year and amounted to $1.6 billion in May. To compare, the trading volume amounted to $1.72 billion in April, and to $2.4 billion on average over 4 months of 2020,” she said.

Based on all of this, Moldabekova said, Kazakhstan’s National Bank did not need to carry out interventions in May.


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