11 Oct 2017 13:51

Kazakh National Bank should allow tenge exchange rate to be flexible - IMF

ASTANA. Oct 11 (Interfax) - The National Bank of Kazakhstan should intervene in money-market trading only occasionally and continue to focus on price stability, the head of the International Monetary Fund (IMF) Mission in Kazakhstan, Mark Horton, told Interfax on Wednesday.

Kazakhstan should adhere to the existing approach and allow the exchange rate to be flexible. The National Bank should continue to focus on price stability and inflation targeting, according to Horton.

The National Bank should intervene in money-market trading only to mitigate unexpected short-term pressures that could lead to a high-volatility situation, he said.

Excluding the temporary decrease in oil prices in June, the external environment has been relatively favorable for Kazakhstan, and the recent fluctuations in the tenge's exchange rate do not mirror any deterioration in fundamental economic indicators. The fluctuations must have been provoked by short-term temporary factors, including rumors, according to Horton.

As reported, IMF revised Kazakhstan's GDP growth outlook for 2017 upward to 3.3% from 2.5%.

The Chief Banker of Kazakhstan, Daniyar Akishev, said on Monday that the tenge may strengthen, as the national currency is undervalued as compared to the currencies of Kazakhstan's trading partners.

At the moment, the domestic foreign exchange market is volatile mainly because of speculative factors, according to the chief banker. The current increase in demand for foreign currency is driven by devaluation expectations, he said.

Kazakhstan switched to a floating exchange rate for the tenge on August 20, 2015.

The current exchange rate is 337.48 tenge/$1.