Weekly Forex Review (August 1 – 5, 2022)

During the week, the tenge showed a slight weakening against all traded currencies, except for the Chinese yuan (strengthening by 0.01%). The national currency weakened against the dollar by 0.19% to 477.98 tenge, against the ruble by 2.32% to 7.93 tenge, and against the euro by 0.45% to 488.93 tenge. The tenge has weakened against the dollar by 10.69%, against the ruble by 37.67%, against the yuan by 4.15%, and against the euro showed a slight strengthening by 0.03% since the beginning of the year.

In the first week of August, the volatility decline of the tenge exchange rates, which began at the end of July, continued against the dollar and ruble. The weekly volatility of the tenge exchange rate against the dollar was 0.3% (-0.1 p.p. compared to the previous week, -1.0 p.p. to monthly volatility in July), and 2.3% against the ruble (-0.1 p.p. and -2.0 p.p., respectively).

The trading volume of the USDKZT pair decreased by 23.06% compared to the previous week (a decrease of 17.17% compared to the average weekly trading volume in 2022) and amounted to 482.49 million dollars.

Jusan Analytics Opinion

We have observed a decrease in the strength of the exchange rate in response to changes in fundamental factors during the week. Despite a significant change in both internal and external market terms the tenge exchange rate remains at the same level.

Moreover, the tenge exchange rate was not affected in any way by the most significant recent weekly drop in oil prices, nor by information on pumping through Tengiz-Novorossiysk pipeline decreased due to repairs at Tengiz deposit and the suspending production at Kashagan.

In general, there is a slight shift in the reaction of the tenge exchange rate as a tool for absorbing internal and external shocks to the economy, which is probably due to the lag in the reaction of foreign exchange market participants. They have recently had a tendency of a sharp transition from potent negativity to unreasonable optimism about exchange rate formation. It is difficult to say that the domestic foreign exchange market is effective due to the observed imbalances in exchange rate formation, so we expect greater volatility with a simultaneous strengthening of the dollar’s position against the tenge in the future.


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