Kazakh currency falls to record low
Energy-rich Kazakhstan’s national tenge currency plunged to a record low against the dollar Friday as the Central Asian country struggles with low oil prices and the impact of Russia’s economic crisis.
The tenge dipped to a historic 310 versus the dollar following evening trading on the Kazakh stock exchange, down from 185 against the dollar in August when the national bank abandoned a long-term currency corridor for a free float.
Officials in the ex-Soviet country said the tenge’s alarming slide was disrupting the preparation of the 2016-18 budget.
“Many people thought that adjusting the exchange rate would have a positive impact. There are advantages, but there are more disadvantages,” said deputy finance minister Lena Karmazina at a session of the Kazakh legislature’s lower house.
“We have a lot of expenses tied to the exchange rate with foreign currencies: International obligations, debt servicing… (imported) medicines, defense capabilities and security.”
On Thursday, the tenge dipped 5 percent against the dollar as the central bank vowed to reduce its periodic market interventions, while prospects for the country’s key crude oil exports remained gloomy.
At the beginning of the week the government dismissed the national bank’s governor Kairat Kelimbetov, replacing him with 39-year-old Daniyar Akishev.
Kazakhstan’s 75-year-old autocrat President Nursultan Nazarbayev promised earlier this year that low oil prices and economic pain in neighboring Russia would not lead to cuts in social spending.
Kazakhstan recorded impressive GDP growth in the decade after the turn of the millennium and is considered an economic leader in the depressed Central Asian region.