Tenge exchange rate forecast for 2023

In 2023, the quotes of the national currency of Kazakhstan fluctuated greatly. During the first half of 2023, it was strengthening. Then she suddenly began to lose ground. The peak drawdown occurred at the end of September 2023, when the value of the dollar reached 486 tenge.

Why is the tenge exchange rate falling?

During 2023, Kazakhstan suffered a lot of negativity, which affected the price of the national currency. Were: power outages; problems in the agricultural sector caused by unfavorable weather conditions. The exchange rate was greatly affected by the tightening of monetary policies of partner countries and leading economies. Investors preferred to convert the tenge into more profitable, stable currencies against the backdrop of a cycle of growth in key rates in the US and EU.

What does the tenge exchange rate depend on?

Kazakhstan actively trades hydrocarbons. Therefore, it is highly dependent on exports and the global economy. The slowdown of the latter had a negative impact on the exchange rate. This led to a reduction in the price of oil. But the cost of hydrocarbons has gone up. The result was an increase in budget revenues from mining exporters.

The forecast for the dollar/tenge exchange rate towards the latter changed due to increased support from the financial regulator. The government of Kazakhstan has exchanged many US dollars for the national currency. This helped support and strengthen the course.

In general, the forecast for the dollar/tenge exchange rate for 2023 is influenced by external and internal economic factors. We’ll talk about them a little below. The forecast for the euro/tenge exchange rate for 2023 depends on the ratio of the dollar and the euro. There is a noticeable correlation between them. The euro’s weakening trend could make it more profitable.

What was the forecast for the tenge exchange rate in October 2023

You need to understand: expectations from the exchange rate of Kazakhstan’s national currency change quite often. A month ago she began the process of strengthening. This has led to the need to revise forecasts for the remainder of the year. They were influenced by:

• easing monetary policy;
• smoothing by the National Bank of the Republic of Kazakhstan;
• oil quotes.

Let’s talk about all this in more detail.

Monetary policy has eased

Financial regulators of leading economies are ending cycles of raising key rates and say that they will soon decline. As a result, the interest of safe investment advocates becomes weaker. The demand for risk is also growing. Including investments in the currencies of developing countries.

In October 2023, experts expected that by the end of the year the tenge would strengthen its position by 2–3% if there were no significant external shocks that could increase its volatility. Over the next two years, there is a possibility that the national currency of Kazakhstan may lose up to 4–5%. That is if the economy continues to grow.

Growth will remain at 4.4–5%. Inflation will slow to 6%. An additional confirmation of the forecast will be a slight imbalance towards imports.

Influence of the NBRK

The National Bank of the Republic of Kazakhstan (NBK) adheres to a free exchange rate policy. That is, he will not set a goal to fix the value of the currency at a certain level. According to analysts, the financial institution will begin to smooth out fluctuations that are not correlated with fundamental factors.

In October 2023, the National Bank of Kazakhstan set a record for the sale of foreign currency. More than $1.5 billion has been withdrawn from the National Fund. This helps the tenge stay afloat.

In addition, the National Bank of Kazakhstan made several statements about tightening monetary policy. He promised: sales of reserves will continue. Against this background, a positive forecast is being formed for the tenge against the ruble and other currencies.

Rating Forex comment: experts expect that the NBRK will reduce the interest rate only if inflation drops below 10%.

Why is the ruble/tenge exchange rate growing against the backdrop of rising oil prices?

In theory, rising oil prices should push the value of Kazakhstan’s national currency up. But, as a rule, the price of commodity assets affects quotes with a noticeable delay. First you need to wait for the receipt of foreign currency earnings, then its sale to pay taxes. Taxes in Kazakhstan are paid in February, May, August and November.

Rating Forex comment: in October, experts expected that by the end of the month the dollar would rise to 481 tenge. The November indicators refute the forecast made then for the exchange rate of the dollar, euro, ruble to tenge. The currency strengthened to 470 tenge per dollar.

The current geopolitical situation has a positive effect on oil prices. But if it drags on and there is an escalation in the Middle East, hydrocarbons could rise sharply. This will lead to inflation. Its negative impact will be much stronger than the profit from sky-high oil prices.

GDP is falling

In October 2023, it was said that in September the GDP growth rate had worsened. Fell from 4.9% to 4.7%. This is a negative factor that immediately affected the IMF forecasts. They got worse. Expected annual GDP fell to 4.6%, down 0.2%.

Forecasts in November

The penultimate month of the year showed better dynamics than October. Tenge has strengthened significantly. The price of the dollar dropped below 470 tenge. This was largely due to the fact that the US national currency lost 0.5% of the index due to easing monetary policy.

The National Bank of Kazakhstan plans to sell between $1.3 billion and $1.4 billion from the National Fund. This is less than in October (it was $1.5 billion), when sales accounted for 47% of the total trading volume on the Kazakhstan Exchange.

The forecast for the ruble, dollar and euro against the tenge is positively affected by the fact that large players have retained their risk appetite. They continue to invest in emerging market currencies.

Against the tenge is periodic demand from Kazakhstani companies that need foreign currency to pay for foreign contracts and debts. Therefore, on some days the tenge may lose ground. But this phenomenon is temporary.

Forecast of the ruble to tenge exchange rate for 2023. What could have a negative impact?

The forecast for the tenge to ruble exchange rate for 2023 suggests that the value of the ruble will be at the level of 4.9–5.08 tenge. But there are reasons to believe that the situation may worsen. Several factors can weaken the tenge in the near future:

• Decline in oil prices. If black gold becomes cheaper, the supply of foreign currency to the domestic market of Kazakhstan will decrease.
• Growth of the USD index. If the Fed continues to raise interest rates, a significant portion of investors could flee risky assets.
• Geopolitical factors. Growing tensions can stimulate the desire of investors to preserve their capital in a safe haven.

The strengthening of the ruble against the backdrop of tightening foreign exchange controls may affect its price in tenge. Because the national currency of the Russian Federation will strengthen against the dollar. It is already showing similar dynamics. In addition, the ruble is also stabilizing against the backdrop of rising oil prices.

Throughout 2023, the tenge only strengthened against the Russian national currency. This was due to the weakening of the ruble itself. Now there is a reversal trend. If the Central Bank of the Russian Federation takes even stricter measures to control the exchange rate, this trend (weakening of the tenge) may continue.

Speculative traders can make money on this if they open short positions against the tenge. Medium- and long-term traders should take a closer look at the opinions of leading rating agencies. They predict an increase in Kazakhstan’s GDP, which will lead to an increase in the value of the national currency.