Exchange rate situation

Olzhas Tuleuov, Advisor to the Chairman of the National Bank, spoke about deposits dollarization and the situation with the tenge exchange rate in his interview with  the "Kapital" edition.

According to the financial expert, in 2020, the gold and foreign exchange reserves of the National Bank increased to $ 35.7 billion, and this is the maximum level over the past 9 years. Both the total portfolio of reserves and the foreign exchange portion of reserves have grown.

"The growth of gold and foreign exchange reserves is a very important indicator of increasing the resilience of the tenge to various external shocks," he notes.

Speaking in general about the dynamics of the national currency, the representative of the National Bank pays attention to the following indicators:

volatility of the tenge

“The indicator is in line with the changes and volatility in the rates of other floating oil currencies, such as the Russian ruble, the Norwegian krone, the Mexican peso and the Canadian dollar";

the degree of interventions influence on market exchange rate formation

“The National Bank of Kazakhstan constantly monitors the situation in the foreign exchange market and reserves the right to take measures to smooth out excess volatility. During the past year, in certain periods of low liquidity, the National Bank supported the foreign exchange market with interventions to ensure its normal functioning. 79% of the interventions, or $ 1.5 billion, took place in March 2020, when there was a shock drop in oil prices, a collapse in markets and a record depreciation of the currencies of trading partner countries".

market factors determining the tenge exchange rate

“The National Fund's presence in foreign currency market does not negate the fact that the tenge exchange rate is determined by market factors and based on the principles of a floating regime. First of all, the funds and transfers of the National Fund do not refer to the gold and foreign exchange assets of the National Bank. And in this case, the role of the National Bank is limited only by the fact that it serves this process as a financial institution. The resources accumulated in the National Fund in the form of tax deductions from oil exporters are a full-fledged market, and not a regulatory or interventional part of the domestic foreign exchange supply, which is sold on the market with a lag".