- Akishev replaces Kelimbetov as Kazakhstan's central bank chief
- President says trust is low in Kazakh currency, central bank
The longest-serving post-Soviet leader is looking to a man almost half his age to win back trust in the national currency.
Kazakh President Nursultan Nazarbayev, in power for more than a quarter century, handed the reins of the central bank on Monday to Daniyar Akishev, 39, an aide in his administration and former deputy governor at the regulator. He will succeed Kairat Kelimbetov, a graduate of Georgetown University, who devalued the tenge twice in his two-year tenure and spent 6 percent of reserves attempting to stabilize the world’s most volatile currency after a collapse in oil prices forced a shift to a free float in August.
Akishev “faces the unenviable and Sisyphean task of trying to restore public confidence in the central bank’s monetary policy,” Kate Mallinson, a partner at London-based political risk advisory firm GPW & Co., said by e-mail. He “is likely to have been one of the few individuals willing to take on the kamikaze position of the governor with Kazakhstan’s bleak and uncertain economic outlook.”
At stake for the $212 billion economy is how to survive in a new age of cheap energy prices that are robbing oil producers of revenue and sending their currencies into a tailspin. One measure of the task facing the new governor is a record exodus from tenge savings in banks after this year’s devaluation, which left 76 percent of all retail deposits denominated in foreign currencies, according to Moody’s Investors Service. The tenge, which lost about a third of its value against the dollar in the past three months, is the world’s second-worst performer in the period after Zambia’s kwacha.
Unlike Kelimbetov, who studied in the U.S. and Russia and has served in roles ranging from deputy prime minister to head of Kazakhstan’s sovereign wealth fund, Akishev spent more than 18 years at the central bank, including seven as deputy governor. Kelimbetov’s predecessor, Grigori Marchenko, was in charge of Deutsche Bank AG’s local securities unit in the late 1990s and also served as first deputy premier.
“Akishev definitely won’t be a second Marchenko, who was quite tough and professional in defending his interests and the interests of the central bank,” said Dosym Satpayev, director of the Almaty-based Risk Assessment Group. “Akishev has less experience, less bureaucratic weight to really turn the central bank into a more or less independent player. Even Kelimbetov had more lobbyist opportunities to force through some adjustments and changes. In that he was a head taller than Akishev.”
With the central bank starting to manage about $19 billion of Kazakh pension savings, it will come under increasing pressure from those seeking greater sway over its decisions, he said.
“There’s now a struggle in an effort to influence the central bank, and in that situation I doubt that Akishev will have the opportunity to become its powerful core,” Satpayev said.
Nazarbayev praised Akishev’s education and experience as appropriate and said his appointment was necessary “for the benefit of the country’s financial system.”
The president warned last month that central Asia’s biggest energy producer faces a “real crisis” that will be deeper than the downturn in 2009, when the government bailed out banks and spent $10 billion from its oil fund to prop up the economy. After growing an average of 5.5 percent since 2007, gross domestic product will expand 1.3 percent in 2015, according to a Bloomberg survey. Annual inflation more than doubled in October to an almost seven-year high of 9.4 percent.
“Trust in the national currency and the central bank is low -- this can’t be allowed,” Nazarbayev, 75, said in a statement. “There is a deficit of tenge liquidity in the country, lending is declining. Work needs to be done to fix this poor performance.”
Nazarbayev, who won a fifth presidential term in April by a landslide, unveiled the tenge in 1993 after Russia’s introduction of its own ruble sparked hyperinflation in the former republics still using the old Soviet tender.
The tenge, already devalued by 19 percent in February 2014, weakened from about 187 against the dollar to a record low of 299.99 soon after the free float was introduced on Aug. 20, when Kelimbetov predicted it would reach a balance within seven days. The tenge depreciated 0.7 percent to 283.25 against the dollar as of 7:05 p.m. in Almaty after a 0.4 percent loss on Monday, extending last month’s 2.9 percent decline. Its three-month historical volatility, a measure of price swings, is the highest globally at 58.2 and double the level for the Ukrainian hryvnia behind it.
“What we are observing these days, including the drawn-out devaluation, is one of the consequences of the government’s inconsistency, the absence of dialogue with business,” Yerlan Ospanov, chief executive officer of Verny Capital that manages billionaire Bulat Utemuratov’s money, told reporters in Almaty on Tuesday. “Government actions must be consistent and predictable.”
Oil-rich nations from Venezuela to Saudi Arabia are struggling to find policy responses to the fuel’s dropping price. Kelimbetov cut the tenge loose from its dollar peg following devaluations by Russia and China, Kazakhstan’s neighbors and its two biggest trading partners. That forced him to spend at least $1.7 billion to smooth swings after it was allowed to trade freely. The central bank said Monday that it also sold $3.9 billion from the National Oil Fund to meet budget needs last month.
The new governor must “streamline the refinancing framework, which should be aimed at bringing down the volatility of short-term interest rates,” VTB Capital analyst Maxim Korovin said by e-mail. “Improving the access of banks to the refinancing window is yet another significant task.”
The next rate decision is scheduled for Friday. The regulator raised its new base interest rate to 16 percent on Oct. 2 and may increase borrowing costs again if pressure on the currency continues, Kelimbetov said in an Oct. 5 interview.
“The central bank’s problems won’t be fixed by changing the head of the regulator -- they are institutional problems,” Sabit Khakimzhanov, head of research at Halyk Finance, a unit of the country’s second-largest lender, said by phone from Almaty. “They must be solved by changing and strengthening the mandate of the central bank, by making it more independent from the government.”