Kazakhstan awaits 'a new decision' about the tenge exchange rate, fears a new devaluation and keeps its fingers crossed.
Devaluation fears in Kazakhstan have been high since the West started imposing sanctions on Russia for its involvement in the conflict in Ukraine and the pressure on the Russian currency exchange rate intensified.
Kazakhstan is closely linked with Russia, because of their huge common border and vast trade relations. Kazakhstan-Russia border is over 7.5 thousand kilometres long, and their economies stand so tightly together that Russia accounts for 36% of Kazakhstan’s imports and 7% of its exports. So everything that goes on in Russia sends a wave to Kazakhstan.
Besides, Kazakhstani residents remember too well the nearly 20% devaluation of February 2014. So every time there is a cause for uncertainty the devaluation fears resurface. Throughout the year Kazakhstani officials have repeatedly made statements explaining that Kazakhstan had enough fedex reserves to keep the Tenge exchange rate stable, and promising that no new devaluations were forthcoming. But in spite of their efforts, many remained unconvinced.
On several occasions panic-driven queues gathered at exchange bureaus throughout the country causing cash bottlenecks and fuelling the speculations even further. Kazakhstanis now tend to keep their savings in dollars or euro rather than in Kazakhstan's national currency, the tenge, because of lack of trust to the latter.
Rotterdam, 05/09/2014-INC News
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