Kazakh Tenge May Advance 3.9% Next Year on Inflation, Oil, Citigroup Says

The Kazakh tenge may strengthen as much as 3.9 percent next year should rising oil prices and quickening inflation spur the central bank to ease its controls over the currency, Citigroup Inc. says.

The former Soviet republic’s exchange rate may appreciate to 142 per dollar should crude average $90 to $95 a barrel and inflation jump above 9 percent, Citigroup’s chief economist in Moscow, Elina Ribakova, and analyst Natalia Novikova wrote in a research note e-mailed today.

The tenge was little changed at 147.6075 per dollar at 11:54 a.m. in Almaty, near its 147.3257 per dollar average for this year, according to data compiled by Bloomberg.

The National Bank of Kazakhstan, which manages the tenge by buying and selling foreign currency, said in June it would prevent the tenge from moving more than 0.3 percent against the dollar each trading session. Kazakhstan holds 3 percent of the world’s crude reserves, according to BP Plc. Oil rose 1.1 percent to $83.92 a barrel in New York today. Kazakh inflation was 6.7 percent in September, the quickest since July.

Kazakhstan’s currency will probably stay within a 146.5 to 147 range for the rest of this year, Citigroup said. The ruble strengthening beyond 28 per dollar would also be a “trigger” for tenge appreciation in 2011, the note said. The ruble gained 0.4 percent to 29.9685 per dollar in Moscow today.

To contact the reporter on this story: Emma O’Brien in London at eobrien6@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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