Russian Federation is allowing the rouble to track crude’s drop.
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“They realize that they can not stand in front of a train”, Timothy Ash, the head of Europe, Mideast and Africa credit strategy at Nomura Holdings Inc.in London, said by e- mail. “In anticipation of higher US interest rates, some emerging-market countries are opting to let their currencies weaken to stimulate exports and avoid massive intervention”. “This means that exchange rate changes may occur in the direction of easing or strengthening, which will be determined by the domestic currency market and global economic situation”.
The oil-dependent central Asian country, which trades heavily with Russian Federation and China, is being buffeted by the fall in the rouble and crude prices.
Acting against a backdrop of devaluation and depreciation in the currencies of some of its major trading partners and rivals, Kazakhstan’s government and central bank said the country’s economic policy would henceforth be based on inflation targeting.
Benchmark Brent crude is trading at just under $50 per barrel and the US Energy Information Administration (EIA) said last week prices will average less than $60 per barrel throughout 2016. The currency sank to an all-time low of 256.98 per US dollar in Almaty.
Others were more bearish. Central bank representatives weren’t available to comment when contacted by Bloomberg.
In mid-July, the National Bank of Kazakhstan expanded the corridor of fluctuations of the tenge exchange rate from 170-188 tenge to 170-198 tenge per $1.
The government may trim its budget spending due to lean revenues this year, Masimov said. ArcelorMittal’s local unit proposed a “significant reduction” in worker salaries due to a surge in steel imports, Chief Executive Officer Vijay Mahadevan said August. 7.
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“It’s a move to prepare for the Fed rate hike”, said Tommy Ong, managing director for treasury and markets at DBS Bank Hong Kong.
