Kazakhstan’s national currency has taken a fresh tumble this week, provoking a new cycle of anxiety.
On July 20, the official exchange stood at 338 tenge to the dollar, but that had officially slid by July 28 to more than 350. As has become customary, however, street exchange shops are buying dollars at slightly higher rates, depending on the location. There were reports of a 365 rate in the capital, Astana.
Predictably, the slide has dominated news coverage and discussions on social media. Some comments under a piece on news website Nur.kz are illustrative.
“My pension savings are going to become toilet paper,” wrote one reader.
“Today I took my car to be repaired. The work has been estimated at 26,000 tenge. Now, because of the fall of the tenge, the cost has been changed to 37,000. And they haven’t put up our salaries,” wrote another.
Kazakhstanis are growing used to devaluation of their currency, not that it gets any easier. Rather than sliding gradually, the tenge has historically been allowed to plunge in one-off drops, as happened in February 2009, February 2014 and August 2015. Since that last drop, however, the currency has been allowed to float freely, adding a strong element of unpredictability.
The National Bank, which has become target of much popular criticism, defended itself from attacks on July 26.
Adil Muhamedjanov, director of the monetary operations and asset management department at the National Bank, told Tengri News that the free-float policy allowed for daily volatility according to numerous factors — primarily the price of oil and currency markets in Kazakhstan’s main trading partners.
Internal developments like domestic market sentiment, movements of state budget funds, the tax payment season and a gradual trend toward “de-dollarization” have also had their effect, Muhamedjanov said.
Local experts have expressed some skepticism about explanations linking the performance of the tenge to fundamentals, however.
Kursiv newspaper cited the head of BRB Invest, Galim Husainov, as suggesting that the performance of the Russian ruble was far more strongly correlated to the price oil than the tenge. Evidence of that could be found in the fact that while the ruble rose during periods of high oil prices, the tenge remained level, he said.
Meanwhile, economist Aidarkhan Kusainov told Nur.kz that the tenge’s wobble was more likely than not related to a seasonal demand for dollars and, as a result, nothing to panic about.
“When the demand for dollars is satisfied, the rate will revert back to its previous level,” he said.
Sign up for Eurasianet's free weekly newsletter. Support Eurasianet: Help keep our journalism open to all, and influenced by none.