Kazakh tenge is expected to strengthen

/By Azernews/

By Nigar Abbasova

Kazakhstan's national currency tenge is expected to strengthen, stated the country’s “KAZKOM securities” investment company.

The rate of the currency is expected to reach the level of 310-320 tenge ($ 0.92 – 0.95) against 1 USD by the end of 2016.

The forecast further reads that the stabilization of the rate of interest is currently observed in the currency market while the level of dollarization of bank deposits falls against the background of essential weakening of the devaluation prospects and profitability of the tenge.

External background is expected to remain favorable for the national currency. Fixation of oil price at the level of $50 is also considered to be a favorable factor for the tenge.

The report states that the price for crude oil is not expected to be lower than $40 per barrel.

Rate of inflation is expected to decrease and amount to 8 percent by late 2016.

The value of the Kazakh national currency began to decline after the National Bank of the country switched into the floating exchange rate in August 2015. As a result, the exchange rate of the tenge dropped by half against the U.S. dollar during six months. In January 2016 the currency faced its bottom-line level at the rate of 383.91 of the USD.

Kazakhstan's economy depends heavily on the oil sector. It accounts for an estimated 20 percent of GDP, 50 percent of fiscal revenues, and 60 percent of exports. GDP in Kazakhstan averaged $ 73.77 billion from 1990 until 2014, reaching an all time high of $ 231.88 billion in 2013 and a record low of $ 16.90 billion in 1999.

Kazakhstan’s GDP growth slowed from 4.1 percent shown in 2014 to 1.2 percent in 2015 due to falling oil prices and weakened domestic and external demand.

The official exchange rate of the US dollar and euro to Kazakh tenge was set at 330.16 tenge and 375.00 tenge respectively on June 10.