The National Bank of Kazakhstan's decision to cut the base rate to 15.75% does not signal a weakening of the tenge. The national currency's exchange rate is shaped not only by the regulator's interest-rate policy but also by oil prices, export foreign-currency earnings, National Fund operations and demand for foreign currency. Venera Zhanalina, an expert at QazExpertClub and a financier, explained what to expect from the tenge in the coming months, while the Association of Financiers of Kazakhstan explained what allowed the National Bank of the Republic of Kazakhstan to lower the rate, infohub.kz reports.
A gradual reduction in the base rate can lower the yields on new tenge-denominated instruments and shrink their interest-rate advantage over foreign assets. All else being equal, this could dampen foreign portfolio investors' interest in Kazakhstan and reduce additional demand for the tenge, the expert believes.
"What matters more to investors is expected real returns, taking into account inflation, credit and currency risks. The base rate itself does not equal the yield on investment instruments, and actual inflation does not reflect future price growth," Venera Zhanalina notes.
In her assessment, even if the base rate is cut further to 14–15%, tenge-denominated instruments may remain attractive to foreign investors if inflation and currency risks decline and yields stay at a competitive level.
According to the Association of Financiers of Kazakhstan's lead analyst, one of the key factors was the slowdown in food and non-food inflation. In September, food prices rose 8.5% year on year and non-food prices 11%. A stronger tenge, which curbs the cost of imported goods, provided additional support.
"Room for easing monetary policy was created by the slowdown in food (8.5%) and non-food (11%) inflation and by the stronger tenge, which restrains imported inflation. At the same time, we share the National Bank's cautious approach: monthly inflation (0.6%) and services inflation (8.9%) remain elevated. Experts' expectations also exceed the inflation target," analyst Almat Orakbay explained.
The base rate alone does not determine the direction of the exchange rate, the financier stresses. Additional currency supply from exporters, National Fund operations and other market participants, and oil prices can offset a decline in portfolio investment inflows.
A telling example is September 2026, when the tenge strengthened 4.6% to 440.49 tenge per dollar despite the ongoing base rate cuts.
In September, currency sales from the National Fund and those under gold-purchase mirroring almost offset currency purchases for the Unified Accumulative Pension Fund (UAPF).
"In my view, the tenge may remain relatively stable through the end of the year if foreign-currency supply from exporters and other market participants is sufficient and non-residents' interest in tenge instruments persists," the expert notes.
According to the expert, the cut in the base rate from 16.25% to 15.75% alone gives no grounds to forecast a significant weakening of the tenge. Further exchange-rate dynamics will depend on the balance of foreign-currency supply and demand, inflation expectations and the attractiveness of tenge assets compared with foreign alternatives.