Dollar Surges: National Bank Intervenes to Support Currency

On July 30, the U.S. dollar crossed the psychological threshold of 550 tenge in Kazakhstan’s trading sessions, prompting the National Bank to step in with currency interventions to prevent further weakening of the national currency, Orda.kz reports.

According to the National Bank, the tenge has dropped by 5.8% since the start of July and by 4.7% since the beginning of the year.

The regulator said it was forced to intervene due to “extremely low liquidity” in the currency market — in simpler terms, a shortage of foreign exchange — coupled with increased speculative pressure.

Toward the end of the day, the exchange rate settled around 546.

Despite the selloff, the National Bank maintains that external conditions for the tenge remain generally favorable and that the current depreciation is not grounded in fundamentals.

Core economic conditions remain positive: global oil prices are steadily above $70 per barrel, and there is an ongoing trend of global dollar weakening. Therefore, the current depreciation of the tenge does not reflect fundamental factors and points to an undervaluation of the national currency,
 the National Bank of Kazakhstan

The Bank's press service stated that it will continue to monitor the market and take further stabilization measures if needed, with the aim of restoring balance between supply and demand in the currency market.

Original Author: Nikita Drobny