Deputy director of the Monetary Operations Department of the National Bank of Kazakhstan (NBK) Ivan Serdyuk told about the main trends in the currency market in August, Kazpravda.kz refers to the Bank’s press service reporting.

What’s going on in the oil market? How does this impact the tenge?

– Since the beginning of August, oil prices have shown a slight rise on the background of data on a decline in the U.S. inventories, as well as the explosion in Beirut. According to analysts, this could lead to supply disruptions. On August 5, the Brent crude prices reached 5-month maximum, overstepping the mark of $ 45 per barrel.

If oil prices stabilize and move into a gradual growth phase, this may have a positive effect on the tenge exchange rate: foreign exchange inflows will increase and the current account of the balance of payments will improve by the end of the year.

What else, besides the traditional main factors, oil, dynamics of the trading partners’ currencies and local factors, could potentially impact the national currency rate?

– The government securities market has the potential to become a support factor for our currency. Currently, tenge instruments look attractive enough for foreign investors against the background of other countries’ government securities. Our profitability is higher.

Purchases of securities by foreign investors will affect the foreign exchange market, there will be more currency, which will contribute to the tenge strengthening.

How do you assess the influence of the so-called seasonal factors, “tax week” and “vacation season”?

– Every second month of the quarter is the period of the "big tax week". During this time, exporters pay rent tax and mining tax. Exporters sell foreign currency to pay taxes. This, as a rule, provides increased supply in the foreign exchange market and corresponding support for the tenge exchange rate.

However, it should be borne in mind that in August, taxes will be paid for the second quarter, and back then oil prices reached their lows in recent decades, $19 per barrel. That is, we expect the effect of the “tax week” factor to be moderate.

There is another seasonal factor. This is the so-called “vacation season” when people exchange tenge for foreign currency in order to fly on vacation to other countries. Many countries remain closed to tourists this year due to the coronavirus. That is why the effect of the vacation season on the tenge will be limited.

Against the backdrop of the economic activity recovery, the demand for cash foreign currency in exchange offices is gradually growing. On average, since the beginning of the year, exchangers have been selling $ 385 million each month in foreign currencies, which is less than the average figures of 2018 and 2019, when monthly sales were $ 575 million and $ 653 million, respectively. According to our preliminary estimates, in July the net sales of foreign currency to the population will amount to $450 – 500 million.

These are internal factors that may affect the dollar value in August.

Source: Kazpravda.kz