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Kazakhstan Raises New Key Rate to 16% to Stabilize Tenge

  • Kazakh currency is world's most volatile after free-float move
  • Central bank introduced new benchmark interest rate last month
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Kazakhstan’s central bank raised its new base interest rate to tame the world’s most volatile currency, the tenge, which has struggled to find balance since policy makers moved to a free-floating exchange rate in August.

The overnight repo rate, which was set as the new benchmark after the central bank abandoned the currency peg, was increased to 16 percent from 12 percent, according to a statement on Friday. The regulator also established interest rates for lending at 17 percent and for liquidity withdrawal at 15 percent, according to the statement. The central bank said it narrowed its rate corridor “to reduce the volatility of money-market interest rates and give more clear signals to the market.”