Tenge’s gradual devaluation, better choice for Kazakh government
By Aynur Karimova
Possible devaluation of Kazakhstan’s national currency tenge has become the most discussed topic in local media sparking mixed reactions.
As experts warn about possible devaluation of tenge, the government and the National Bank of the country assure the nation that the devaluation will not occur at all.
Earlier Head of the National Bank, Kairat Kelimbetov said the bank doesn’t intend to allow sharp fluctuations in the exchange rate of tenge in 2015, adding that currently, tenge (the currency corridor is 170-188 KZT/$1) is in a currency corridor which implies certain changes.
The assumption of devaluation is based on the low range of oil prices, and the devaluation of Russian ruble.
Fluctuations of oil prices across the world markets have closely impacted the energy rich Kazakhstan, whose economy mostly depends on oil. A decrease in oil prices badly impacts the country’s economy, cutting revenues to the state budget.
In 2015, the national currencies of oil exporting countries, including the Kazakh tenge, will likely decrease against U.S. dollar due to existing slump of oil prices.
Weak ruble
A weakened ruble by force of western sanctions has put in trouble not only Russia, but also the neighboring countries, including Kazakhstan, which is closely connected with Russian economy.
At first glance, this situation leaves no other choice for Kazakhstan but to devaluate its national currency. However, there is always a better choice and the Central Asian country may survive with less loss.
Director of the Center for Macroeconomic Researches Olzhas Khudaibergenov believes that Kazakhstan’s application of gradual-monthly devaluation of the national currency tenge is ideal for the country’s economy.
“If the devaluation of the national currency is carried out gradually - six percent per year or one tenge per month, it will not cause a sharp rise in the prices. When devaluation of the national currency is held at once by 20 percent, the prices will rise sharply, and this trend will continue. The gradual devaluation of tenge is good both for the population and the business,” the expert said.
He also noted that sharp devaluation of tenge will only bring losses.
“When a sharp devaluation is carried out, for example, by 20 percent, all sellers together will respond to this by increasing the prices of goods. And the prices hike will also amount to 20 percent,” the expert stressed.
In this case, no one could expect any improvement from the implemented devaluation. If the devaluation is carried out once in five years, the country’s economy will be able to compensate the losses. So, implementing devaluation of the national currency on yearly basis will be a difficult scenario for Kazakh economy.
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Aynur Karimova is AzerNews’ staff journalist, follow her on
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