Kazakhstan's national cos to increase FX supply to curb tenge devaluation - minister

ALMATY. Dec 17 (Interfax) - Kazakhstan's national development institutions will borrow funds and invest in foreign currency next year to curb the weakening of the tenge, National Economy Minister Nurlan Baibazarov said.

"We recently held a series of meetings with the National Bank where we outlined measures to increase the supply [of foreign currency] on the domestic currency market. The government will actively support the National Bank in this matter. Next year we plan to attract the main investments from off-budget, private sources. It will be mainly foreign currency investments, our holdings, national development institutions will actively borrow and invest in foreign currency. And all this will pass through our currency market," he said at a press conference on Tuesday, commenting on a forecast by the Association of Financiers of Kazakhstan (AFK) for the tenge exchange rate for next year.

Baibazarov said that in December the National Bank of Kazakhstan offered the market more than $2 billion through transfers and currency interventions. "So I think all these measures will help maintain the exchange rate so that devaluation does not accelerate," he said.

The National Economy Ministry's press office told Interfax that next year there were plans to attract lot of investment in foreign currency on the international capital market, and then the funds raised will be converted into tenge in Kazakhstan "to carry out construction projects, purchase raw materials, pay salaries and other expenses." So dollar supply will increase. But the ministry said this was not only about raising loans, but also about foreign direct investments.

The AFK said the KZT/USD exchange rate (522.49 tenge/$1 on December 17) could carry on falling until the end of 2024 domestic demand for foreign currency will significantly exceed supply.

It said the KZT/USD exchange rate could fall to 545.2 tenge/$1 in 2025. "Pressure on the tenge may be exerted by low commodity prices, lower oil production due to the need to implement the OPEC+ agreement, slowing economic growth in the main consumers of Kazakhstan's commodities (China and the EU), growing imports, including due to the implementation of investment projects, worsening exchange rate expectations, a difficult geopolitical situation in the region and a general flight of investors from risk," says the AFK forecast for 2025.

As reported, in November this year, the National Bank of Kazakhstan, for the first time after a long pause, carried out currency interventions in the amount of $1 billion.