Kazakh tenge falls more than 2% vs dollar on Ukraine escalation

The Kazakh tenge dropped more than 2% against the dollar on Tuesday, tracking the Russian rouble which earlier came under pressure due to the escalation of the crisis over Ukraine, and prompting the central bank to intervene. On Monday Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine and has since ordered the deployment of troops there, deepening Western fears of a major war in Europe.


Reuters | Nur-Sultan | Updated: 22-02-2022 17:52 IST | Created: 22-02-2022 17:30 IST
Kazakh tenge falls more than 2% vs dollar on Ukraine escalation
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  • Kazakhstan

The Kazakh tenge dropped more than 2% against the dollar on Tuesday, tracking the Russian rouble which earlier came under pressure due to the escalation of the crisis over Ukraine, and prompting the central bank to intervene.

On Monday Russian President Vladimir Putin recognized two breakaway regions in eastern Ukraine and has since ordered the deployment of troops there, deepening Western fears of a major war in Europe. The tenge, which traded at around 438 to the dollar on Tuesday, its weakest in two months, often tracks the movements of the rouble, the currency of Kazakhstan's neighbor and former Soviet overlord.

"According to our estimates, the rouble may firmly settle in the 75-80 (roubles per dollar) range and we do not expect short-term spikes above 85," said Yevgeny Vinokurov, chief economist at the Eurasian Development Bank. "Since Russia is Kazakhstan's key trading partner, this directly impacts the tenge-dollar rates."

Kazakhstan's central bank said it sold $33 million from its foreign exchange reserves on the domestic market on Tuesday to ease the pressure on the tenge. The rouble hit its weakest level in nearly two years earlier on Tuesday before rebounding after Moscow said it would only recognize the regions' independence within the boundaries currently under the control of Moscow-backed separatists and Ukraine played down the prospect of a large-scale conflict with Russia.

Umut Shayakhmetova, chief executive of Kazakhstan's biggest lender Halyk Bank, said the Ukraine crisis would certainly impact the country. "The question is whether the central bank is going to support (the tenge) at some point but, as we know, you can't support it for too long as you start burning forex and gold reserves, which are finite," Shayakhmetova said.

Halyk GDRs were up 1.3% in London around 1115 GMT, but two other major Kazakh companies - fintech firm Kaspi.kz and uranium miner Kazatomprom - were down 3.1% and 1.7% respectively. Kazakh President Kassym-Jomart Tokayev held an urgent security council meeting on Tuesday where he ordered the cabinet and the central bank to come up with an anti-crisis plan on how to react to the international security crisis and sanctions fallout.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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