According to the latest report of the National Bank of Kazakhstan on the monetary policy, the rate of dollarization of banking deposits in Kazakhstan was at 22.2% for individuals, the lowest point over the past 26 years, and 24.2% for entities, which is a 16-year low, as of February 1, 2024.
«A big difference in interest rates between deposits in the tenge and a foreign currency as well as mutual volatility of the exchange rate have driven the decline of the dollarization rate to its lowest point over the past 26 years. In addition, the inflow of new deposits in the tenge and the outflow of deposits in foreign currencies have also contributed to the decline in dollarization. As of February 1, 2024, the dollarization rate of deposits stood at 23.1%,» the regulator said in a statement.
The number of deposits in foreign currency had decreased by 15.5% due to low interest rates. As a result, many foreign-currency deposit holders have switched to deposits in the tenge or alternative financial instruments with higher profitability compared to bank deposits nominated in a foreign currency, the survey says. Furthermore, the number of deposits in foreign currencies declined because of the strengthening of the tenge over the past months. In 2023, the national currency of Kazakhstan strengthened by 1.9%.
«In September 2023, against this background, deposits in foreign currency slipped to a 15-year low for entities and to an 11-year low for individuals. In the fourth quarter of 2023, they grew by 73.1% month-on-month but then dropped in January because of seasonal factors,» the National Bank said.
Deposits of individual clients in the tenge increased by a third year-on-year, while deposits for entities reported a 14.6% increase. The regulator believes that this growth is due to high interest rates for bank deposits in the tenge and low interest rates for foreign-currency deposits.
Demand deposits accounted for 59.7% of all deposits in the national currency in January 2024, while the share of savings deposits grew to 11.1%. In general, demand and savings deposits grew by 42.3% and 48.3% year-on-year, respectively. Moreover, according to the National Bank’s survey, 27% of Kazakhstanis had deposits in January 2024, a historical high since 2016.
