Kazakh central bank says aims to smooth tenge volatility

Kazakhstan's central bank sees the current tenge exchange rate as adequate given oil prices and other external factors, but will keep intervening on the market to avoid excessive volatility, its chairman said on Monday. The tenge's weighted average rate of the tenge edged weaker to 271.50 per dollar on the Kazakhstan Stock Exchange on Monday from a close of 271.05 in the previous trading session. But it was still well above the mid-September intraday trough of 300 per dollar.
"We will be present on the market as long as it is necessary, not to keep the rate at some specific level, but to prevent unnecessary speculation and volatility," governor Kairat Kelimbetov told Reuters in an interview. Oil exporter Kazakhstan let the tenge, previously pegged to the dollar, float freely in August, and it has since lost more than 30 percent of its value against the greenback.
But the central bank puzzled the market when it resumed selling dollars in mid-September. It has since spent over $1.3 billion on interventions which allowed the tenge to trim its losses from 37 percent. "A lot of goods and services which contribute to inflation are imported and the exchange rate affects their prices," Kelimbetov said. "It would be incorrect to say that we will stay away from the market." Kelimbetov said the regulator had corrected what it saw as the market overshooting. The bank's decision to hike its policy rate to 16 percent from 12 percent last Friday was also aimed at propping up the tenge, Kelimbetov said.