Kazakh Tenge Crisis: Causes and Effects Explained

The Kazakh tenge crisis was a significant economic event that had far-reaching consequences for the country. The crisis began in 2014.

The devaluation of the Russian ruble, a major trading partner of Kazakhstan, triggered a sharp decline in the value of the tenge. This led to a severe economic crisis in Kazakhstan.

The Kazakh government's decision to devalue the tenge in 2015 was an attempt to stabilize the economy. However, it ultimately led to higher inflation rates.

The inflation rate in Kazakhstan soared to 12.6% in 2016, one of the highest in the country's history.

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Kazakhstan's economy is facing a significant challenge due to the decline of its currency, the Kazakh tenge. The National Bank has spent over $1 billion in foreign exchange interventions since mid-November to stabilize the currency.

The global appreciation of the dollar, a decrease in oil prices, and the tumbling Russian ruble are major factors contributing to the tenge's decline. The ruble's value has taken a hit after new Western sanctions were imposed on Gazprombank, a Russian state-owned bank.

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Kazakhstan and Russia have a significant trading relationship, with Russia accounting for almost 20% of Kazakhstan's foreign trade. The two countries have been working to increase the use of national currencies in their trade, with over 80% of payments now made in national currencies.

The Kazakh government has taken steps to stabilize the currency, including requiring "quasi-government entities" to sell 50% of their foreign currency revenue. The National Bank also expects to spend another $800 million to $900 million in foreign currency sales in December to cover transfers from the National Fund to the state budget.

Kazakhstan's economy has faced similar exchange rate fluctuations in the past, such as at the beginning of the war in Ukraine. The country's deputy prime minister, Nurlan Baibazarov, has appealed for calm, stating that finances are stable.

Kazakhstan's currency, the tenge, has been on a downward spiral, hitting a record low of 520 to the dollar on Monday, according to financial news reports.

The central bank has spent over $1 billion in foreign exchange interventions since mid-November to stabilize the currency, which has surpassed the psychological threshold of 500 tenge to the dollar.

The tenge's decline is attributed to several factors, including the global appreciation of the dollar, a decrease in oil prices, and the tumbling Russian ruble.

Russia accounts for almost 20% of Kazakhstan's foreign trade, and the fall in the value of the ruble has had a significant impact on the tenge's value.

The central bank has taken measures to stabilize the currency market, including selling dollars to state-run companies and expecting foreign-currency inflows for investment projects next year.

The government will monitor developments in the first quarter of next year before deciding on whether to change parameters of the budget, which was based on an assumed average oil price of $75 per barrel and a tenge rate at 470.

The tenge's outlook will depend on market participants' expectations, quarterly tax payments, international market conditions, and changes in the geopolitical backdrop.

The central bank plans to spend another $800 million to $900 million in December to cover transfers from the National Fund to the state budget.

The tenge weakened to a record low of 530.83 per dollar at 2:37 p.m. local time in Almaty, bringing its loss this year to more than 13%.

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The Kazakh Tenge (KZT) is a currency that's worth knowing about. Since 2009, its value has steadily declined against the US dollar. This has significant implications for travelers and businesses alike.

Kazakhstan's economy is heavily dependent on the exportation of natural resources. This is a fact that's hard to ignore, given the country's vast land mass and strategic location.

Here are some key facts to keep in mind: