National Bank's Actions Could Strengthen Tenge - Expert

Kazakhstan's National Bank is set to significantly increase its foreign currency sales in 2025 to offset tenge emissions linked to its gold purchases, Orda reports.

The bank's operations on the Kazakhstan Stock Exchange (KASE) could reach $15-16 billion by year's end.

Economist Galymzhan Aitkazin wrote on Telegram that the National Bank will boost its currency sales on KASE by $7.4 billion in 2025.

These sales are designed to balance previous gold purchases funded through tenge emission.

The bank plans to sell 750 billion tenge (approximately $1.4 billion) in foreign currency during the first quarter, averaging about $467 million monthly.

This move aims to counterbalance gold purchases made in late 2024. Combined with quasi-public sector operations, total net dollar sales could reach $1.5 billion in 2025.

According to the Kazakhstan Association of Minority Shareholders (QAMS), the National Bank intends to purchase 70 tons of gold from the domestic market for $6 billion in 2025.

The bank follows a specific mechanism: it issues tenge to buy gold, sells it to the National Fund for dollars, then sells this currency on the market.

Since implementing the state's priority right, total gold purchases have reached 615 tons.

By the end of 2024, Kazakhstan's gold and foreign exchange reserves stood at $45.8 billion, with gold accounting for $23.8 billion.

According to our data, a record 10.2 billion in foreign currency was sold from the National Fund in 2024, and taking into account other transactions (but without the QSS), the sales volume amounted to 11.2 billion dollars. Thus, this year the volume of net sales may become even more record-breaking. The volume of dollar sales on the KASE exchange by the National Bank may grow to 15-16 billion, Aitkazin said. 

While these interventions might strengthen the tenge in the short term, Aitkazin warns they could increase the market's long-term dependence on National Fund transfers and interventions.

QAMS also noted that the tenge's recent 10.1% decline against the dollar (from September 2024 to January 2025) mirrors global currency trends, as the U.S. dollar index rose 8.2%.

During this period, the British pound fell by 9.5% and the Japanese yen by 8.9%.

This development follows a record year of withdrawals from Kazakhstan's National Fund in 2024, when over 5.7 trillion tenge were withdrawn, exceeding the fund's income of 3.7 trillion tenge (excluding investment returns).

Original Author: Ruslan Loginov