Kazakhstanis Return to Buying Rubles as Russian Currency Weakens

Amid the weakening ruble, Kazakhstanis are once again turning to the Russian currency, which they had previously been selling off, Orda.kz reports.

Economist Yeldar Shamsutdinov wrote in his Telegram channel that trading results on the Kazakhstan Stock Exchange (KASE) on September 10 showed a sharp increase in demand for the ruble, coinciding with the Russian currency’s slide on the Moscow Exchange.

Over the course of the day, ruble trading on KASE increased by almost half, +47%. It is likely that the surge in volume occurred at the time of the ruble weakening on MOEX to 85 per dollar. The ruble-tenge pair closed near 6.37-6.42, the average weighted rate was 6.375. The turnover reached 5.43 billion rubles, which corresponds to about 23% of the total dollar turnover on KASE,
notes Yeldar Shamsutdinov.

He also emphasized that the dollar is cheaper in Kazakhstan than in Russia: 85 rubles now equals 541.9 tenge, while in the cash market the gap is even wider — the dollar sells for 86.81 rubles, or 553.6 tenge.

That makes a difference of 3.8 tenge on the exchange and 15.5 tenge in cash.

This creates the potential for arbitrage: buying dollars in Kazakhstan and then selling them in Russia would provide a spread, but the real effect is limited by commissions and regulatory barriers,
 explains Yeldar Shamsutdinov.

Kazakhstanis had previously been actively selling rubles both at exchange offices and on the stock exchange.

In May, 35.7 billion tenge worth of Russian currency was sold, and by August, exchange offices were left holding an excess of rubles equivalent to about $100 million.

The current depreciation of the ruble against the dollar may now be changing that trend.

Original Author: Nikita Drobny