Kazakh Government pragmatically realizes market policy in the matter of tenge devaluation - independent Azerbaijani analyst R.Radzhabov

BAKU. KAZINFORM - In the context of the situation related to the adjustment of the national currency of Kazakhstan, at the request of «Kazinform» International Agency's correspondent this event was commented by Rauf Radgabov, one of the leading independent analysts of Azerbaijan and the chief editor of «3rd View» Think Tank.
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According to Radzhabov, adjustment of the national currency has always been unpopular measure among the population. In particular, national currency appreciation has affected local manufacturers. Loans in local currency as well as in euros and dollars became more expensive. But currencies in the Russian Federation, Belarus, Turkey and Ukraine, major trade partners of the Republic of Kazakhstan, became cheaper. In addition, there is a trend of slowing economic growth in the People's Republic of China which market is the largest for Kazakhstan's industry.

However, if to explain Kazakh Government's decision, we can say that the time for the national currency adjustment was selected quite successfully.

It is clear that the country's annual income as well as volumes of oil cash proceeds will increase. However, the financial reports of some private Kazakh banks show losses.

Consequently, the Government of Kazakhstan decided to accelerate the process of regulated banks' capitalization and increase their participation in the foreign exchange market. Otherwise alarms on the balance sheets of most commercial second-tier banks will grow into a real threat of excessive monetary capitalization. Financial system of Kazakhstan is ready to weaken tenge because of changes in foreign major world currencies and the level of oil prices, inflation, connected with increase in energy tariffs and other factors. Therefore twofold opinions are out of place. It was just necessary.

As it is known, the county gets United States dollar from selling oil as it is the main currency in the world oil market. In order to «sterilize» dollars to ensure net budget flows, the National Bank must regularly opt for intervention. There was no the way out as financial opportunities of Kazakhstani private banks do not allow them to independently carry out the procedure.

I can say that the Government of Kazakhstan takes a comprehensive plan to strengthen measures to prevent exchange adjustments of tenge and rising of prices. As the influx of currency into the country is rapidly growing. Consequently, the Government of the Republic of Kazakhstan in order to maintain the current rate of tenge may decide to liberalize capital movements - weakening or complete removal of restrictions on the export of foreign currency. In addition, measures may be taken for further development of government securities market. In order to weaken the dollar burden on the state's economy Kazakhstan can sell part of its oil in euros. It is clear that a comprehensive plan may change the refinancing rate of the National Bank.

Naturally, the refinancing rate determines all highly developed countries' cash potency and at the same time reflects inflationary expectations. And, in addition, checks the capacity of governments. And it can be stated that the Government of the Republic of Kazakhstan implements pragmatic market policy in the matter of tenge devaluation.

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