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After a period of strengthening, the Kazakh Tenge has begun to weaken against the US dollar, prompting questions about the currency's future. Timur Suleimenov, the Chairman of the National Bank of Kazakhstan, has provided an explanation for these shifts in the currency market.

Understanding Currency Market Dynamics

Suleimenov addressed concerns about the dollar's performance, stating that the current situation is not entirely unexpected. He noted that the Tenge's previous strengthening occurred when oil prices, Kazakhstan's primary export, were significantly lower, around $65-70 per barrel, leading to a dollar rate of approximately 500 Tenge.

Factors Influencing the Exchange Rate

The National Bank chairman highlighted that the exchange rate is influenced by both the supply of and demand for currency. He explained that demand often increases due to the implementation of investment projects and programs by corporate, quasi-governmental, and state entities. This demand typically rises mid-year and towards the end of the year, a seasonal pattern the bank is currently observing.

Market Processes at Play

Suleimenov characterized the fluctuations in the exchange rate as a natural market process. He concluded that the movement of the dollar, experiencing periods of weakening followed by strengthening, is governed by established market principles.

Previously, Suleimenov had also discussed how a decrease in the base interest rate could impact the Tenge's exchange rate. In a significant move, Kazakhstan recently lowered its base interest rate for the first time in two years, reducing it from 18.0% to 17.0% annually.

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