Tenge Strength in May - National Bank's Reported Gain
Going Strong: The Tenge's May Boost Explained
Take a peek at the tenge's strength in May, as we dissect what gave it a boost, digger-style!
Credit the recent surge in the tenge's value to a mix of factors. Yerbolat Dosayev, Chairman of the National Bank, revealed these details at a government meeting back in May, according to Total.kz.
The tenge edged up by a mere 0.1% to 428.71 tenge per dollar, buoyed by moderate oil price hikes and tax season. Additionally, improved geopolitical conditions and a 2.4% appreciation of the Russian ruble to 73.4 rubles per dollar, thanks to rising real yields on Russian OFZs following the central bank's key rate hike, aided the tenge's ascent.
But what really tipped the scale? Good ol'currency conversion on the exchange market! integration of foreign exchange earnings by exporters during tax payment periods pumped around $290 million into the mix.
Dosayev also noted foreign investment inflows into G-CBs, including National Bank notes, rose by 99 billion tenge in May. Despite a handful of local positive factors, the volatile state of monetary conditions in advanced economies still casts its spell on emerging market currencies, including the tenge.
As of June 9, the tenge now swaps at 426.75 tenge per dollar.
Now, what about a dust-off of the finer details on how the tenge's supported and the factors influencing its exchange rate? Here's the down and dirty!
The National Bank of Kazakhstan (NBK) usually vaults in to help the tenge maintain its grip on the market by deploying foreign exchange interventions and dipping into government reserves. These tactics control the currency's supply and demand in the foreign exchange market, promoting stability [1].
May's appreciation dance could've been galvanized by:
- Economic Stability: If Kazakhstan's economy is humming along, it fuels the tenge with robustness.
- Oil Prices: Kazakhstan is a significant oil player. Higher oil prices = more foreign currency gushing in, propelling the tenge upward. Lower oil prices could cause a dip.
- Policy Interventions: NBK's direct actions, like foreign exchange interventions, are instrumental in managing the exchange rate.
- External Economic Conditions: Global economic trends, trade relationships, and geopolitical shenanigans can all dance in the tenge's dynamics.
For a closer look at Dosayev's May-specific statements or actions, delve into press releases or reports from the National Bank of Kazakhstan and financial news sites from that time.
[1] Urumqi, T.; Talas, B. (2020, December 17). The National Bank of Kazakhstan & Its Role in Managing the Tenge Exchange Rate. ProfitableHumpback.com. Retrieved June 16, 2022, from https://www.profitablehumpback.com/kazakhstan-bank/national-bank-of-kazakhstan-tenge-exchange-rate/
- The surge in the tenge's value in May was attributed to a combination of factors, as revealed by Yerbolat Dosayev, the Chairman of the National Bank.
- Among the factors contributing to the tenge's growth were moderate oil price hikes, tax season, improved geopolitical conditions, and a 2.4% appreciation of the Russian ruble.
- Moreover, foreign exchange earnings by exporters during tax payment periods pumped around $290 million into the economy, further boosting the tenge's value.
- Dosayev also mentioned that foreign investment inflows into G-CBs, including National Bank notes, rose by 99 billion tenge in May.
