Tenge Expected to Weaken to 512 per Dollar Within a Year
Illustration: Orda.kz
The dollar is expected to trade at around 480 tenge by early September and reach 512 tenge within 12 months, according to an August survey by the Association of Financiers of Kazakhstan, Orda.kz reports.
The association’s analytical center surveyed professional financial-market participants. Their short-term outlook for the tenge has improved, but they still expect the dollar to rise above 500 tenge within a year.
Respondents forecast an exchange rate of 480.2 tenge per dollar by early September and 512.2 tenge in 12 months. The outlook is slightly more optimistic than it was a month ago, when the respective forecasts stood at 483.3 and 520.4 tenge.
Expectations improved amid increased foreign-currency sales by the National Bank, the conversion of export revenue and preparations by large companies for quarterly tax payments, the association explained.
Will the National Bank Cut the Base Rate Again?
Sixty percent of respondents expect the National Bank to lower the base rate from 16.75% to 16.5% at its September 4 meeting. Another 28% expect it to remain unchanged, while 12% predict an increase.
The base rate is forecast to fall to 14.75% within a year, suggesting that market participants expect monetary policy to be eased gradually. The real interest rate is projected to decline from 6.55% to 4.65%.
Inflation and Oil
The 12-month inflation forecast fell from 10.4% to 10.1%. Analysts linked the revision to slowing price growth. Monthly inflation declined from 0.8% to 0.6% in July, while annual inflation eased from 10.3% to 10.2%.
A stronger tenge and weaker consumer demand are also expected to help contain prices.
Brent crude is forecast to trade at $77.3 per barrel in a year, below its current level of around $84 and the previous forecast of $80. Market participants expect tensions in the Middle East to ease gradually, although the risk of supply disruptions through the Strait of Hormuz remains.
The forecast for Kazakhstan’s GDP growth over the next year was raised from 4.6% to 4.7%.
Original author: Ruslan Loginov
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