Azernews.Az

By Bloomberg

Kazakhstan’s central bank widened the tenge’s trading band against the dollar as policy makers push ahead with their goal of shifting to a free-floating exchange rate after 2016.

The central bank raised the tenge’s upper trading limit to 198 per dollar, central bank Governor Kairat Kelimbetov told reporters in Astana Wednesday. While that’s 5.1 percent weaker than the previous ceiling, the tenge won’t decline beyond 190 this quarter, he said.

“This corridor allows the currency to fluctuate independently of the negative scenarios that may take shape outside Kazakhstan,” Kelimbetov said. The lower limit of the band was kept at 170, or 15 tenge stronger than the central bank’s base level of 185 per dollar, he said.

Pressure is mounting on Kelimbetov to let the currency weaken after Russia’s ruble sank 46 percent last year, hurting the ability of Kazakh companies to compete with their biggest trade partner. Even after the ruble rebounded this year it’s still 39 percent weaker than a year ago, while the tenge is down just 1.9 percent in the period.

The Kazakh currency declined 0.1 percent to 187.08 per dollar as of 2:33 p.m., the weakest on an intraday basis since May 12. Policy makers devalued the tenge 19 percent in February last year.