Over the past week, the tenge has shown strengthening positions against all traded currencies. Tenge strengthened by 1.75% against the dollar and the exchange rate was 468.10 tenge per dollar by the end of the week. It became stronger by 2.23% against the ruble and amounted to 7.89 tenge per ruble, against the yuan – by 2.69% to 68.12 tenge per yuan, against the euro – by 2.83% to 466.27 tenge per euro.
Thus, the national currency has strengthened against the US by 1.88% since the beginning of August (since the beginning of the year it has weakened by 8.41%).
There is an increase in the volatility of the tenge against the dollar. During the week under review, it was 1.0%, which is 0.9 p.p. more than last week.
Due to the big tax week, the USDKZT pair trading volume increased by 53.1% compared to the previous week (an increase of 22.4% compared to the average weekly trading volume in 2022) and amounted to $ 719.33 million. At the same time, the growth in trading volumes could potentially be higher. Exporters preferred to attract tenge liquidity to make tax payments on the money market rather than sell dollars at the current exchange rate. During the week under review, we could see an increase in trading volumes on the money market with a simultaneous increase in the TONIA rate from 13.5% a week earlier to 15.25% in the middle of the week under review.
Jusan Analytics Opinion
During the week, we have observed an increase in USDKZT pair trading volume due onset of the big tax week of exporters. At the same time, dynamics of the tenge exchange rate did not have a strong tendency to strengthen. The tenge exchange rate strengthened to the level of 461.98 tenge per dollar by the middle of the week, but it began to lose its position and weakened to the level of 468.1 tenge per dollar by the end of the week. There was an increase in money market trading simultaneously with the increase in the foreign exchange market activity, which in our opinion, can signify the evasion of exporters from converting foreign exchange earnings at the current rate since they expected the national currency to weaken.
The current domestic economic conditions contribute to the continuance of the observed exchange rate levels. However, external factors, the change of which should also affect the dynamics of the tenge exchange rate, indicate increased pressure on the national currency. Contrary to the signals of the economy cooling, the rhetoric of the US Federal Reserve about the likely monetary tightening indicates more growth of the global dollar than previously expected (our forecast for September-November has been adjusted).
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