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Kazakhstan|business|July 11, 2016 / 01:07 PM
Kazakh central bank to pounce on dollars as tenge regains appeal

AKIPRESS.COM - 10095745Kazakhstan’s central bank is prepared to return to the currency market in force to mop up excess dollars after a month of doing “practically zero” as higher returns draw savers to tenge deposits, Governor Daniyar Akishev told Bloomberg.

“If there are significant inflows of foreign currency, we are ready to buy as before,” Akishev said in an interview on Friday in Almaty, Kazakhstan’s commercial capital. Seasonal factors including summer travel boosted demand for foreign currency in June, and “the National Bank’s participation wasn’t necessary,” he said.

Policy makers are focused on purging the $184 billion economy of excess reliance on dollars after the crash in oil prices forced the central bank to devalue the national currency twice in two years, prompting an exodus from tenge savings.

Akishev, 40, who previously served as an aide in the presidential administration and as a deputy governor at the central bank, had the task of restoring public confidence in the tenge after his appointment by Kazakh leader Nursultan Nazarbayev last November.

After abandoning its currency peg and adopting a free-floating exchange in August, the central bank lifted its new benchmark interest rate as high as 17 percent this year to halt outflows. With the tenge rebounding, the central bank has been active in the currency market again. Net purchases of foreign exchange exceeded $3 billion in February-May before slowing to near zero in June.

The tenge has appreciated almost 14 percent since falling to a record in January, the second-best performer among its ex-Soviet peers after the Russian ruble.

Even when the central bank was present in the currency market, it never accounted for more than 40 percent of trading volumes, according to Akishev.

“In such conditions, it would be inaccurate to say that we were preventing tenge strengthening,” he said. “We were buying up a significant influx of foreign currency.”

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