The tenge, which had been
weakening to record lows with respect to the United States dollar, reversed
course last week, strengthening sharply from 153.8 to 153.1 in three days, a fall of
nearly one-half of one percent, reported a Kazakhstani business weekly, Panorama.
Kazakhstan’s central bank said there were no fundamental reasons for devaluing
the tenge. Devaluation would become more
likely if the world price of oil dropped significantly for a long time; or if
the currencies of Kazakhstan’s
main trading partners – presumably Russia
and China
– weakened sufficiently, the National Bank said. At the moment, it regards both scenarios as
hypothetical.
Since oil dominates Kazakhstani exports, a
fall in the price of crude reduces world demand for the tenge and thus its
exchange value. In principle, a lower
price for a product can increase sales revenues, since people will buy more
units than before. But the world demand
for oil is not sensitive to price changes in the short run, probably because of
the technical difficulty in substituting other energy fuels for the "black gold". So, a fall in world oil prices reduces Kazakhstan’s
export revenues in the short run.
The motivation for the second scenario is
this: Depreciation of the ruble or yuan
reduces the amount of Kazakhstani exports that Russians or Chinese can
buy. To revive their demand for our
exports, the National Bank would have to devalue the tenge.
The Bank’s disinclination to devalue has
probably helped strengthen the tenge. But
not all private analysts are as tranquil as the Bank’s. The Royal Bank of Scotland projects that the
dollar exchange rate will rise to 156 tenge by the end of the year and to 158
or 160 early next year, reported the business weekly Delovoy Kazakhstan late last month.
--Leon Taylor, tayloralmaty@gmail.com
References
Delovoy
Kazakhstan. Valutni rinok. July 19, 2013.
Drozd, Nikolai. Sytuatsyu na valutnom rinke udalos’ uspokoyt
s bolswym trudom. Panorama. August 9, 2013.
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