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National Bank devaluates national currency (Part 3)
Almaty, February 4 2009
The National Bank has announced devaluation of the national currency, Tenge.
"On February 4, the National Bank ceases maintaining Tenge within the previous corridor and finds it mandatory to set a new exchange rate for the national currency. It is suggested that the tenge exchange rate is set at 150 tenge 3%+/- against dollar," the National Bank said in a statement on Wednesday.
The National Bank head Gregoriy Marchenko at a press conference in Almaty on Wednesday said that the step to review the state currency policy stemmed from the need to support domestic producers, who have been recently losing the competition, and saving the state gold an forex reserves.
"In order to ensure the competitiveness of domestically produced goods, the currency exchange rate adjustment is necessary," Marchenko said.
"The National Bank decided on a one-time devaluation yesterday evening. We found this decision urgent and reasonable," he said.
"The devaluation, if taking an average tenge rate, is estimated at about 25%, 150 tenge versus 120 tenge, which is much less than in Russia or Ukraine. We believe a 25% devaluation is a sensible compromise between the economic sectors," he said.
According to the National Bank, for the period from January 2008 to January 2009, the national currencies of other countries all crashed against U.S. dollar: Russia (44%), Belarus (28%), Ukraine (52.5%), Great Britain (38%), Europe (13%), Norway (28%), Brazil (31%), Australia (27%), Canada (26%). Meanwhile, Kazakhstan witnessed a 1% devaluation.
As reported, under the strong pressure on the national currency, the National Bank made a significant effort to maintain a stable exchange rate within the range of 117-123 tenge/$1.
An average tenge exchange tenge rate against U.S. dollar on the Kazakhstan Stock Exchange on Wednesday as compared to Tuesday dropped by 21.66 tenge to 143.98 tenge per $1. On Tuesday the tenge rate against dollar was 122.32.
Today the sale rate of U.S. dollar in exchange offices in Almaty jumped to 155 tenge /$1, the purchase rate was 125-130 tenge/$1.
During the press conference Marchenko said that both the banks and the National Bank would provide enough foreign currency to the currency exchange offices.
According to him, the regional subsidiaries of the second tire banks also have enough foreign currency. The National Bank also imported additional $600 million.
Marchenko said that there was need for the people to turn their deposits from tenge into dollar.
"From out point of view, there is not need to change the currency of the deposits from tenge into dollar as, first, we have switched to a new balanced exchange rate of 150 tenge and, second, the return on tenge deposits will be 5.5% higher at the maximum rate than that on dollar deposits," he said.
Marchenko informed the press conference that the Deposit Guarantee Fund had made a decision to set the maximum interest rate starting February 16 at 8% per annum for foreign currency deposits and 13.5% per annum for tenge deposits.
Besides, Marchenko noted, the National Bank would continue providing the banks with short-term liquidity on the security of the approved instruments and ensure uninterrupted operation of the payment system.
He also said that tenge could not have been devalued before the situation with the large commercial banks was resolved as the banks could not have gone through the devaluation.
Marchenko believes that now when the government gives money to the banks they will survive.
As reported, SamrukKazyna, a state foundation, is going to buy stakes in the four largest banks - Alliance Bank, BTA Bank, Kazkommertsbank and Halyk Bank. Moreover, the government is gaining control over the first two banks.
Earlier in January, the Kazakh Ministry of Economy and Budget Planning, Bakhyt Sultanov, said that "due to the global financial crisis the devaluation of the national currency, Tenge, may be within 10%."
"We think that 10% is the limit for a smooth and gradual devaluation of Tenge," he said then.
The forecasted FOREX rate in the republic's budget for 2009 is set at 123.5/$1.
Kazakhstan's gold and currency reserves rose by 21% last year to make $46,734.7 million.
According to experts from the International Monetary Fund, the influence of the global economic crisis on the Kazakh economy will be mainly determined by such factors as the great dependence of the Kazakh banks on external borrowing and the tumbling prices for minerals.