Azerbaijan, Baku, Nov. 12
By Elena Kosolapova - Trend:
A significant devaluation of Kazakhstan’s the national currency tenge over the last months resulted from the country's high dependence on oil revenues, according to European experts.
“It became evident now that a country, that mainly relies on its natural resources, is of course dependent on the international oil price, which fell into the ground the last months,” German expert on Central Asia Michael Laubsch told Trend.
Moreover Kazakhstan’s close cooperation with Russia within the Eurasian Economic Union creates problems for its economy, Laubsch said.
He noted that the Russian ruble, because of the dropping oil price, but also because of the EU sanctions, became weaker and weaker.
Moreover, Russia complicated European goods supplies to Kazakhstan within the Eurasian Economic Union’s rules, and while Russian goods arrived at a very low price, sales of Kazakh products weakened as a result, Laubsch said.
He added that Kazakh President Nursultan Nazarbayev is right by saying that the real crisis is still coming.
“Kazakhstan has to focus more on the economic development that is not only based on oil. In a globalized world, the dependence on one good and only one main trading partner is not an option to play,” he said.
Researcher at CIDOB Barcelona Centre for International Affairs Nicolas de Pedro shares the opinion that tenge devaluation seems as a direct consequence of Kazakhstan’s economy overdependence on oil prices.
“The fall of the tenge is harming Kazakhstan’s international image and it seems that there is a growing lack of confidence both abroad and internally on the prospects of its economy which is one of the key elements of Astana’s triumphalist narrative,” de Pedro told Trend.
Lecturer at the British University of Glasgow and expert on the Central Asia Luca Anceschi believes that that the impressive depreciation of the national currency is a major challenge for Kazakhstan.
“It is difficult to predict how low the tenge will fall, while a rise in the exchange rate with the US dollar appears highly unlikely. Instability is currently the key word to understand Kazakhstan’s monetary situation,” Anceschi told Trend.
The expert noted that the causes of the tenge devaluation are both external (contagion from other monetary crises, and Russia’s more in particular) and internal (the National Bank’s policy line, first of all).
Tenge rate fell significantly over the past three months - from 186.8 tenge/dollar in July to 312.65 tenge/dollar on Nov. 10.
Tenge started devaluating on Aug. 20 when the National Bank of Kazakhstan abolished the currency corridor for tenge and switched to inflation targeting and a free floating rate to ensure the implementation of a new monetary policy. As a result, tenge lost some 30 percent of its value.
In September and October 2015, the National Bank abandoned the transition to a free-floating tenge rate and started to sell currency instead. The bank’s share in the currency market reached 60 percent. Kazakh National Fund and the National Bank sold more than $5 billion in this period.
Kazakhstan’s National Bank said Nov.5 that it will minimize its participation in the currency market in order to maintain its own and the National Fund’s gold-exchange assets. As a result, the exchange rate of tenge fell sharply from 298.92 tenges per dollar on Nov.5 to 307.53 tenges per US dollar on Nov.6.
Over the past two years, tenge lost more than half of its value. In early 2014 exchange rate of tenge was at 154.06 tenge/dollar.
On Nov. 12 the official rate of Kazakhstan’s National Bank amounted to 306.85 tenge/dollar.
Edited by S.I.
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