Kazakh Tenge Reaches Record Low Following Central Bank Spending Surge

The National Bank of Kazakhstan said last week that the tenge’s decline was spurred by dollar appreciation globally and oil-price fluctuations, as well as state spending on investment projects that stimulated growth in imports.

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Kazakhstan's currency plummeted to a record low on Monday after the central bank spent over $1 billion on interventions in the past two weeks, The Caspian Post reports citing BNN Bloomberg.

The tenge weakened to a record low of 530.83 per dollar at 2:37 p.m. local time in Almaty, according to data compiled by Bloomberg. The government was expected to make an announcement on the currency situation at 3 p.m., according to the prime minister’s press office.

The National Bank of Kazakhstan said last week that the tenge’s decline was spurred by dollar appreciation globally and oil-price fluctuations, as well as state spending on investment projects that stimulated growth in imports. Demand for dollars intensified after the tenge crossed the “psychological level” of 500 per dollar following a slump in Russia’s ruble, the currency of Kazakhstan’s second-largest trading partner, the bank said.

Central Asia’s largest oil producer has been struggling to support the tenge since Oct. 11, when the central bank stopped buying dollars for its unified pension fund. That was followed by verbal interventions last month and an order to state-run companies to sell half of their foreign revenue.

This month, the central bank plans as much as $900 million in dollar sales, after planned spending of about $1.4 billion from the oil fund and its own reserves. Before November, the last time the bank sold dollars to support the national currency was March 2022, in the aftermath of Russia’s full-scale invasion of Ukraine, when the tenge weakened to a then-record of 525.59 per dollar. 

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 said on Monday. It said the bank will preserve its flexible exchange-rate regime, while acting against external imbalances and allowing for the accumulation of foreign-currency reserves.