ASTANA—Following President Donald Trump’s inauguration on Jan. 20, the U.S. dollar slightly declined against the tenge on the Kazakhstan Stock Exchange (KASE). In an interview with Kazinform, economists Arman Beisembayev and Askar Kysykov discussed factors shaping the tenge’s future in the coming months.
President Donald Trump’s inauguration and factors shaping the tenge’s future. Photo credit: Kazinform
Beisembayev noted that this dip in the dollar’s value was a typical market response.
“Since Trump’s election in November, the dollar has steadily strengthened. However, after the inauguration, it weakened slightly. This is a classic example of ‘buy on rumors, sell on facts.’ We saw other currencies, such as the euro and the British pound, rise as well, which aligns with normal market behavior,” said Beisembayev.
However, the future trajectory of the dollar’s exchange rate will depend mainly on Trump’s policy decisions.
“I do not expect an immediate impact on Kazakhstan. However, there are long-term risks that may materialize later in the year. These risks will become clearer once Trump’s policies take shape. The resolution of the Russia-Ukraine conflict will also influence our region’s future,” said Beisembayev.
He noted that Trump’s approach to international conflicts, including avoiding past mistakes in Afghanistan, is aimed at maintaining a strong global stance. Although resolving the current conflicts will be challenging, Trump will likely attempt to address them.
Impact of Russia’s economic health
Economist Arman Beisembayev. Photo credit: Kazinform
Beisembayev emphasized that the dynamics of the tenge’s exchange rate will depend heavily on the state of the Russian economy.
“I do not foresee major changes in the first half of the year, but concerns may arise later. The Russian economy, bolstered by its military-industrial complex, could face significant challenges after the conflict ends,” said Beisembayev.
“For example, signs of logistical problems are already emerging, which may signal broader economic issues. Agriculture is also facing labor shortages,” he added.
Beisembayev also warned that a further weakening of the ruble could negatively impact Kazakhstan’s economy.
Tenge’s prospects in the coming months
Beisembayev projected that the tenge would likely remain around 530 tenge per dollar in the first half of the year.
“There is a possibility of moderate strengthening of the tenge, potentially returning to 505-510 tenge per dollar. This scenario is realistic, as market dynamics are not always linear, and financial markets experience wave-like fluctuations,” said Beisembayev.
However, he noted that risks may push the rate back to 530 tenge or 550 tenge per dollar later in the year. The trade wars, particularly between the United States and China, could also affect Kazakhstan due to Russia’s economic ties to both countries.
The role of oil prices and the ruble
Economist Askar Kysykov. Photo credit: Kazinform
Kysykov highlighted two critical factors influencing the tenge: oil prices and the Russian ruble. Kazakhstan is vulnerable to fluctuations in both.
“There is a risk that oil prices may weaken, but I do not foresee a catastrophic drop, even with Trump’s promise to flood the world with oil (…) The greater concern for Kazakhstan is the ruble, as we import many goods and have a historical parity of five tenge (US$0.0097) per ruble,” said Kysykov.
National Bank’s role in stabilizing the tenge
Kysykov noted that Kazakhstan is experiencing high demand for foreign currency due to expectations of devaluation. In response, the National Bank is intervening to stabilize the exchange rate.
“I think that the pressure on the exchange rate will continue. However, it is important to understand that the National Bank has the tools to smooth out volatility and prevent destabilization,” Kysykov said.
“While the tenge may weaken slightly in the long term, we should not expect sharp fluctuations. I anticipate the exchange rate to remain between 530-550 tenge per dollar in the first half of the year,” he added.
The article was originally published on Kazinform.
