BAKU, Azerbaijan, May 19. Kazakhstan’s tenge rate appreciated by 4.6 percent to make up 445.62 KZT against $1 in April 2022, despite the ongoing uncertainty in the global financial markets, Deputy Chairperson of the National Bank of Kazakhstan Aliya Moldabekova said, Trend reports via the NBK.
According to Moldabekova, in the reporting month, foreign currency demand notably decreased. The average daily trading volume on the Kazakhstan Stock Exchange lowered from $179 million to $92 million with a total trading volume of $1.9 billion.
The decrease in demand for foreign currency was primarily due to a decrease in imports, as a result of a break in supply chains and possible interruptions in supplies.
Besides, taking into account the current situation, in the context of the application of restrictive measures by Russia on the export of certain types of products, it’s possible that the imports will be reoriented to other markets, which requires some time.
The continuing uncertainty, including in foreign markets, will lead to a decrease in the activity of market participants, the NBK’s deputy head noted.
"The general market sentiment has changed, demand from individuals stabilized, which also positively impacts on the tenge exchange rate,” she said. “Measures to protect tenge assets and an increase in the National Bank's rate to 14 percent contribute to ensuring financial market stability and maintaining the attractiveness of tenge deposits."
“Amid the geopolitical situation and exchange rate volatility, the level of dollarization in the banking system increased to 38.4 percent in February 2022, mainly due to revaluation of the exchange rate. However, in March 2022, dollarization decreased to 36.9 percent," Moldabekova noted.
According to her, another factor which strengthened the tenge was the recovery of the Russian ruble as a result of measures taken to control capital and the mandatory sale of foreign exchange earnings by exporters.
"Against the background of the stabilization of the situation in the domestic foreign exchange market during April, the National Bank didn’t carry out foreign exchange interventions,” she further said. “At the same time, in case of short-term fluctuations in the national currency exchange rate, not supported by fundamental factors, the presence of the National Bank in the foreign exchange market can be both on the side of sale and on the side of purchase. In such case, the National Bank won’t limit the reasonable volatility of the tenge.”
The sales of foreign exchange earnings, which amounted to nearly $253 million, by the subjects of the quasi-public sector provided some support for the foreign exchange market of Kazakhstan.
Sales of foreign currency to ensure transfers from the National Fund to the state budget in April amounted to $168 million. The share of sales from the National Fund made up 8.7 percent of the total trading volume.
"In early May, the tenge rate continued to appreciate to equal 432.79 KZT against $1. Thus, since the beginning of the year, the national currency depreciated by only 0.2 percent," concluded Moldabekova.