According to the Association of Financiers of Kazakhstan (AFK), since the beginning of this year, non-residents have spent $89 million to purchase the National Bank’s notes, a fourfold increase over the December figure.
The AFK believes that the strong appetite for those notes was mainly driven by expectations of the U.S. Federal Reserve to cut the base rate soon due to the disinflationary phase in the U.S. The analysts also noticed a strengthening of the tenge exchange rate against USD by 1.76 tenge to 449.96 per dollar. This trend was supported by growing interest in the National Bank notes, a careful decrease of the base rate to 15.25%, an increased volume of foreign currency converted from the National Fund, decreasing imports due to lower consumer and business activity and high oil prices, as well as a high risk appetite among investors.
The National Bank notes are a common instrument of the monetary policy and work with the base rate to help mitigate excessive liquidity in the market. All investors including foreigners have access to these instruments.
In 2023, the total amount of notes at its peak was about $6 billion thanks to big interest on non-residents in bonds issued by the Ministry of Finance and notes by the National Bank, according to Olzhas Igsatov, head of the monetary transactions department under the National Bank. However, by December, the number of notes circulated in the market declined by 49.1% to $2.6 billion.
