National Bank will prevent Tenge Overvaluation
Kazakhstan's central bank chief signaled Monday any revaluation of its tenge currency could be capped to maintain economic competitiveness as Central Asia's largest economy recovers from the global crisis.
The central bank has kept the tenge pegged to the dollar since late 2007, adjusting the rate in February 2009 in a swift 18-percent devaluation. The bank said at the time it would keep the rate between 145 to 155 tenge per dollar for a year.
The tenge has traded at around 150 per dollar since then. But with oil prices recovering from the lows seen in early 2009 and Kazakh oil output set to grow, analysts say rising export revenues could once again drive its currency higher.
"We will not allow for overvaluation of the national currency that could negatively affect the competitiveness of domestic producers in the constantly changing global markets," Marchenko told a meeting of the ruling Nur Otan party.
"The exchange rate will be aimed at maintaining the balance between internal and external competitiveness of Kazakhstan's economy."
Marchenko did not identify any particular exchange rate level or hint at any plans to review the current arrangements.
Alexei Moisseev, chief economist at emerging markets-focused brokerage Renaissance Capital, said a major change in the tenge regime was unlikely and that Monday's comments showed the bank would allow the currency only limited additional upside.
"I think any chance of a free float is very remote," Moisseev said.
"They will probably widen the corridor a bit, but, perhaps, not very much, so more of the same policies as in previous years, as they will also look to replenish reserves."
The central bank spent billions of dollars in 2007 and 2008 to maintain exchange rate stability after Kazakhstan became one of the first victims of the global crisis, according to Reuters.