Kazakh Tenge Drops Most This Year on Oil, Holiday Dollar Demandby
Kazakhstan’s tenge depreciated the most this year, catching up with a four-day drop in crude oil prices and weakening as holidaymakers bought hard currency.
The currency of the second-largest energy exporter among former Soviet nations weakened 5 percent to 354.50 per dollar by 6:21 p.m. in Almaty, the biggest daily decline since December. The yield on Kazakhstan’s $2.5 billion Eurobond due July 2025 climbed 13 basis points to 3.81 percent, rising from a record low.
The tenge has depreciated 4.3 percent this month compared with a 3 percent retreat for the ruble as speculation the global oil glut is entrenched drove the price of crude down by as much as 10 percent. The currency’s drop prompted a statement from the central bank, which reiterated that the tenge is subject to a free float and is influenced mainly by oil and the exchange rates of Kazakhstan’s main trading partners.
"The decline is due to side effects from lower oil," said Dmitry Polevoy, the chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow. Low summer trading volumes may also be a contributing factor for the sharp move, he said.
On top of oil’s declines, summer demand for dollars and the central bank’s reluctance to slow the tenge’s weakness are playing a role, according to Murat Temirkhanov, the head of research at Halyk Bank in Almaty.