Azernews.Az

By Aynur Jafarova

During the last tow days, Kazakh public were engaged in hot discussions on devaluation of their national currency tenge.

The discussions follow a decision by the Kazakh National Bank to devalue its tenge currency by 19 percent to about 185 per dollar. The bank had targeted an exchange rate of 145-155 tenge to the dollar in the last few years, with a mid-point of 150.

The decision has sparked outrage among the public. On February 12, some 40-50 people gathered in front of the National Bank in Almaty demanding the resignation of head of the bank Kairat Kelimbetov.

This is not the first time Kazakhstan is devaluating its currency. In February 2009, the National Bank of the country weakened tenge by 25 percent against dollar.

One of the negative affects of the devaluation is that it will lead to the increase of prices of many goods, including food products. This will not affect the budget and social payments.

Also, the devaluation ultimately will lead to increase of the prices of imported goods, which occupy a large share in the consumer basket of Kazakh citizens. There is also a risk that the public services in the country would become more expensive.

Such decisions pave the way for further inflation. The devaluation of the tenge by 20 percent will increase inflation by 3.3 percentage as well.

"Therefore it is necessary to have a multi-currency basket with a predominance of the currency which you spend more," Kazakh Finance Minister Bakhyt Sultanov said.

However, the devaluation has also some positive results. The devaluation of Kazakhstan's national currency is expected to support the trade balance and improve the foreign trade positions of the country.

Also, the nominal amount of the country's GDP will increase by an additional 6.5 percentage. The nominal GDP growth in Kazakhstan in 2014 will stand at 119.4 percent. The devaluation is also expected to have a positive effect on the revenues of the country's state budget.

Meanwhile, the devaluation may give impetus to the development of the national economy. In particular, companies exporting products abroad may benefit from the fall of the Kazakh currency.

Also, the devaluation may have a positive impact on the situation of large domestic manufacturing companies, the products of which are exported.