What is happening with the tenge exchange rate, the National Bank explained
Tengrinews.kz — The National Bank of Kazakhst commented on the situation in the foreign exchange market and changes in the tenge exchange rate. By the end of July, the national currency strengthened by 1.3 percent to 473.81 tenge per dollar. The National Bank also outlined its planned currency sales for August and discussed the factors expected to influence the exchange rate in the near future.
Tenge strengthened in July
The average daily trading volume on the Kazakhstan Stock Exchange increased from $369 million to $389 million in July. The total trading volume amounted to $8.6 billion.
In July, the National Fund sold $200 million on the exchange market. These sales accounted for 2.3 percent of the total trading volume, averaging approximately $9 million per day.
Notably, the National Bank did not conduct any foreign exchange interventions in July.
Foreign currency sales outlook for August
In August, the National Bank's volume of currency sales from the National Fund is projected to range between $200 million and $300 million.
Furthermore, approximately 374 billion tenge was sterilized in July through mirroring operations. In August, currency sales equivalent to 374 billion tenge are expected for these purposes.
Note:Mirroring operations are a mechanism where the National Bank sells foreign currency to withdraw excess tenge from the economy. This helps prevent a surplus of money in the market and mitigates potential price pressures.
The National Bank emphasized that the principle of market neutrality is maintained when conducting operations with National Fund assets and implementing the mirroring mechanism.
Factors influencing the tenge exchange rate
In the short term, the tenge's dynamics will depend on market participant expectations, quarterly tax payments, global market conditions, and shifts in the geopolitical landscape.
"The National Bank will continue to adhere to a flexible exchange rate regime, which prevents the accumulation of imbalances and ensures the preservation of gold and foreign exchange reserves," the statement said.
UAFP currency operations
In July, the National Bank also purchased foreign currency to maintain the foreign exchange share of the Unified Accumulative Pension Fund (UAFP) assets. Total purchases amounted to $375 million, representing approximately 4.4 percent of the total trading volume.
It was noted that further decisions regarding these operations will be made based on foreign exchange market conditions and within the framework of investment management for pension assets.
As a reminder, on July 24, the National Bank lowered the base rate from 17 to 16.75 percent per annum. The Governor of the National Bank, Timur Suleimenov, stated that the decision was made after extensive discussions. He emphasized that any further rate cuts would only be possible if inflation continues to slow down.