According to Galymzhan Pirmatov, head of the National Bank in Kazakhstan, the risk of tenge volatility is going to stay due to the current geopolitical tensions.
The official said that the National Bank will continue to stick to the flexible method of the exchange rate formation as it allows to keep gold and foreign currency reserves and avoid problems from going deeper.
“In April, the exchange rate of the tenge strengthened by 4.6% despite ongoing volatility on global financial markets. At the same time, the demand for foreign currency dropped in April. The average daily trading volume on the Kazakhstan Stock Exchange decreased from $179 million to $92 million,” he said.
In large part, the support for the foreign currency market was provided by the quasi-state sector entities that sold their foreign currency revenue inside the country ($253.2 million). The regulator also sold about $168.3 million to guarantee transfers from the National Fund to the state budget in April. These transactions accounted for 8.7% of the entire trading volume.
As the situation in the domestic foreign currency market was quite stable in April, the National Bank didn’t intervene in the market with foreign currency injections. As of May 11, the average-weighted USD/KZT rate was about 442.44 tenge per one dollar.