January brought an unexpectedly calm start to the year for Kazakhstan’s currency market. While many feared renewed pressure on the national currency, the tenge instead showed moderate strengthening. By the end of the month, it had appreciated by 0.9%, settling at 501.24 tenge per US dollar.
Against the backdrop of global uncertainty, this result looks less like coincidence and more like the outcome of a carefully balanced market, DKNews.kz reports.
Trading volumes eased - and that is not a bad sign
Activity on the Kazakhstan Stock Exchange declined in January. Average daily trading volume fell from 359 million to 306 million US dollars, with total monthly turnover reaching 5.8 billion dollars.
At first glance, lower volumes may seem worrying. In reality, January is traditionally a quieter month. Businesses, investors, and exporters tend to pause after year-end settlements, reassessing plans and cash flows. In this context, reduced activity reflects seasonality rather than weakening confidence.
National Fund sales stayed measured
One of the key drivers of the currency market remains foreign currency sales from the National Fund. In January, USD 350 million was sold to support transfers to the republican budget. This represented just 6% of total market turnover, or no more than USD 18.5 million per day.
The critical detail here is not the amount, but the pace. Sales were carried out evenly, avoiding sharp shocks to supply and demand. The same logic is expected to hold in February, when planned sales may range between USD 350 and 450 million depending on fiscal needs.
Why mirroring matters
In January, the mirroring mechanism resulted in the sterilization of 350 billion tenge. In simple terms, excess tenge liquidity was withdrawn from the market. A similar volume - equivalent to 350 billion tenge - is expected to be addressed through foreign currency sales in February.
This mechanism often goes unnoticed by the wider public, but it plays a crucial role. Excess liquidity can quietly pressure the exchange rate. Mirroring helps keep the balance, without resorting to direct intervention.
No interventions - a strong signal
Perhaps the most telling point of the month: no currency interventions were conducted in January. The tenge’s movement was shaped entirely by market forces.
For investors and businesses, this sends a clear message. The regulator is not defending specific levels, but allowing the exchange rate to adjust naturally within a flexible framework.
Support from the quasi-government sector
Additional foreign currency supply came from the mandatory sale of export revenues by quasi-government sector entities. In January, these sales amounted to around USD 206 million.
While not dominant on their own, these flows add stability to the market, especially during periods of lower trading activity.
Pension assets stayed on the sidelines
The strategy regarding pension assets remained unchanged. With the share of foreign currency assets already exceeding 40%, no purchases of US dollars were made for the pension investment portfolio in January. The same approach will apply in February.
This decision reduced potential demand for foreign currency and helped maintain balance during a seasonally quiet period.
What will drive the tenge next
In the short term, the tenge’s trajectory will depend on several familiar factors:
- market expectations and sentiment
- quarterly tax payments
- conditions on global financial markets
- geopolitical developments
The regulator has reaffirmed its commitment to a flexible exchange rate regime. The goal is not short-term stability at any cost, but the prevention of imbalances and the protection of gold and foreign exchange reserves.
January’s results suggest one clear takeaway. The tenge entered the year without panic or sharp swings. The real test now lies ahead - as economic activity picks up and external factors become more pronounced, the market will show whether this balance can be sustained.
