Aliya Moldabekova, Deputy Chair of the National Bank of Kazakhstan, commented on the currency market situation, noting that the current fluctuations in the tenge exchange rate are influenced by global challenges, including the strengthening of the US dollar, as well as local factors such as reduced market activity during the holiday period and the dynamics of the Russian ruble, DKnews.kz reports.
NBK
Amid global shifts and the strengthening of the US dollar, Kazakhstan's currency market is demonstrating mixed results. On January 5, 2025, the tenge opened at 525.00 KZT per US dollar and fluctuated within the range of 525.00–528.00 KZT per dollar throughout the day. The weighted average exchange rate recorded at the end of the previous trading day stood at 526.30 KZT per dollar, reflecting a 0.2% depreciation of the national currency.
Trading Volume and Market Activity
On January 4, 2025, the currency market operated under low activity conditions due to international financial markets being closed for the holidays. The trading volume amounted to just $119.5 million, significantly lower than the average daily volumes observed earlier. For comparison, in January 2024, this figure reached $172 million, while in December 2024, it stood at $254 million.
The demand for foreign currency was primarily shaped by the short dollar positions accumulated by market participants during the weekend. Such imbalances are often observed at the start of the year as the market adjusts to new conditions.
External Factors Putting Pressure
One of the key factors exerting pressure on the tenge is the strengthening of the US dollar. The dollar index has reached 108 points, the highest level in two years, indicating increased investor interest in the US currency. This trend negatively affects the positions of currencies in developing countries, including the tenge.
In addition, the dynamics of the Russian ruble significantly influence the tenge exchange rate. Russia is one of Kazakhstan's key trading partners, and changes in the ruble exchange rate are often perceived by the market as a benchmark. However, the current weakening of the ruble to 110.6 RUB per US dollar, recorded on January 3, 2025, is accompanied by low liquidity due to Russia's extended holiday period. This leads to a distortion of the real market picture and increased volatility.
Differences in Economic Realities Between Kazakhstan and Russia
Currently, the markets in Kazakhstan and Russia are operating under different economic conditions. The Russian ruble is affected by sanctions, a factor that has less impact on the tenge. Moreover, using the ruble as a benchmark for Kazakhstan's currency market under the current conditions could lead to excessive market reactions and distortions in exchange rate formation. Sharp fluctuations in the ruble should not directly influence the tenge exchange rate, as they do not correspond to the fundamental economic indicators of Kazakhstan.
The Role of the National Bank
The National Bank of Kazakhstan continues to closely monitor the situation on the currency market. If unwarranted pressure on the tenge intensifies, not supported by fundamental factors, the regulator is ready to intervene by providing additional currency supply to the market through foreign exchange reserves.
Forecast and Expectations
Given the ongoing external pressure on the currencies of developing countries, the tenge exchange rate is likely to continue fluctuating within its current levels. However, Kazakhstan's strong economic fundamentals, including stable foreign exchange reserves and relatively low external debt, provide a basis for confidence in the stability of the national currency.
Market participants must consider the differences in the operating conditions of the economies of Kazakhstan and Russia, avoiding excessive reactions to short-term changes in the ruble exchange rate. In such circumstances, the active position of the National Bank plays a critical role in ensuring stability and minimizing volatility in the currency market.
Thus, January 2025 has started with a challenging situation on the currency market, influenced by a combination of external and internal factors. However, the regulator's actions and the fundamental strengths of Kazakhstan’s economy suggest long-term stability remains achievable.
