Azernews.Az

By Aynur Jafarova

The price of oil affect the exchange rate of Kazakhstan’s national currency tenge much more than devaluation of Russian ruble, Chief Economist at Renaissance Capital investment company Oleg Kuzmin believes.

He told RBC-TV Channel that tenge is bound to a basket of currencies, in particular the U.S. dollar by 70 percent, to euro by 20 percent and to ruble by 10 percent, therefore devaluation of ruble doesn’t have so much affect on the exchange rate of tenge.

“Earlier this year, Kazakhstan made adjustments to the exchange rate of the currency. Since 2009, i.e. for four years, the exchange rate was stable. During this period, almost all the currencies of other developing countries gradually lost their values. As a result, tenge became a too strong currency. This led to the formation of a large number of economic imbalances,” the expert noted. “In such situation, the Central Bank of Kazakhstan made an absolutely right decision to make an adjustment of currency.”

Kuzmin went on adding that Russia is Kazakhstan’s important trade partner, and they do not feel comfortable if tenge is greatly strengthened against ruble.

“I believe that the market often overestimates the effect of ruble for the Kazakh currency. Ruble is important, but it is not a major factor, so one cannot say that the devaluation of ruble will lead to the devaluation of tenge. The main factor both for Kazakhstan and Russia is, first of all, the price of oil,” the expert stressed.

Kuzmin also said if next year the oil price will be closer to $80, Kazakhstan would have to simultaneously devalue its currency by 16-17 percent.

The expert believes if the oil price is set at $80 per barrel Kazakhstan will face dramatic changes in its economy.

“In this case, we expect that the GDP growth in Kazakhstan may not amount to 4.5 percent like this year. It may stand at just 1.5 percent, while in Russia this figure will fall to 2 percent. This is due to the fact that Kazakhstan's international reserves is much more than that of Russia, and as President Nursultan Nazarbayev stated, they will be ready to pursue fast aggressive anti-crisis policy and spend these reserves,” he concluded.

Kazakhstan, one of the five Central Asian countries, is rich with hydrocarbon reserves. Crude oil production in the country amounted to 53,585 million metric tons for 8 months of this year, and this is 0.7 percent less compared to the same period of 2013. The production of crude oil amounted to 45,012 million metric tons, condensate to 8,573 million metric tons and natural gas to 28.3 billion cubic meters in the reported period.

Earlier, Kazakh National Economy Ministry said a decrease in the world oil prices expected by late 2014 will not have a significant impact on the country’s economy.

"It should be stressed that despite the decline in oil prices in October, the average annual oil price amounted to $106.6 dollars per barrel in the first nine months of this year,” the ministry said. “In case of further decrease in oil price up to $80 per barrel by late 2014, the average annual price will remain at $100 per barrel. The budgeted average annual price of $95 per barrel according to the updated forecast of the socio-economicdevelopment for 2014-2018 should be taken into account.”

However, given the deterioration of the external conditions, the Kazakh government worked out an action plan for the country’s economic growth by late 2014, aimed at ensuring the stable economic growth.

Works on clarifying the socio-economic development forecast for 2015-2019 are underway as well. The Kazakh government will also consider the current situation on the world commodity markets and the adjusted forecasts of international organizations concerning the world prices on the main export goods.

The government took Kazakhstan’s economic development with the oil price of $80 per barrel in 2015 as the basis. Currently, the Kazakh Parliament is considering the revision of the parameters of the draft state budget for 2015 - 2017.