(Bloomberg) -- Kazakhstan’s currency tumbled to a record low on Monday after the central bank spent more than $1 billion on interventions over the past two weeks.
The tenge weakened to a record low of 530.83 per dollar at 2:37 p.m. local time in Almaty, according to data compiled by Bloomberg, bringing its loss this year to more than 13%. That’s the worst performance among currencies in the region after Russia’s ruble, which is down more than 15%.
Kazakhstan government and central bank are taking “coordinated measures to stabilize the currency market,” Deputy Prime Minister Nurlan Baibazarov told reporters on Monday. The government plans to ask exporters to sell dollars, while also expecting foreign-currency inflows for investment projects next year to help buoy the exchange rate, he said.
The government will monitor developments in the first quarter of next year before deciding on whether to change parameters of the budget, which was based on an assumed average oil price of $75 per barrel and a tenge rate at 470, Baibazarov said. “There’s no point to cede” to a craze for purchasing dollars, and the tenge won’t drop to 600, he said in response to a question.
The National Bank of Kazakhstan said last week that the tenge’s decline was spurred by dollar appreciation globally and oil-price fluctuations, as well as state spending on investment projects that stimulated growth in imports. Demand for dollars intensified after the tenge crossed the “psychological level” of 500 per dollar following a slump in Russia’s ruble, the currency of Kazakhstan’s second-largest trading partner, the bank said.
Central Asia’s largest oil producer has been struggling to support the tenge since Oct. 11, when the central bank stopped buying dollars for its unified pension fund. That was followed by verbal interventions last month and an order to state-run companies to sell half of their foreign revenue.
This month, the central bank plans as much as $900 million in dollar sales, after planned spending of about $1.4 billion from the oil fund and its own reserves. Before November, the last time the bank sold dollars to support the national currency was March 2022, in the aftermath of Russia’s full-scale invasion of Ukraine, when the tenge weakened to a then-record of 525.59 per dollar.
The tenge’s outlook will depend on market participants’ expectations, quarterly tax payments, international market conditions and changes in the geopolitical backdrop, the central bank said on Monday. It said the bank will preserve its flexible exchange-rate regime, while acting against external imbalances and allowing for the accumulation of foreign-currency reserves.
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