Famous economic observer Aidarkhan Kusainov is convinced that resources for the maintenance of the USD-KZT exchange rate are depleted, and all currency market players feel it.

Mr. Kusainov’s telegram-channel post:

“Exchange rate tension is becoming obvious both for experts and the Financial Control Agency.  We are hearing more voices saying that the rate ceased to react to anything, it is suppressed and justifications of its changes are poor.

Which gives grounds for practical forecasts. In reality, even

if the National Bank withdraws all petrodollars, the rate shall fall down not even by two times, but to the level KZT 700-750, which is the overshoot.  If we do nothing, it will roll back to KZT 620-670

The reason is simple – when the RR-KZT exchange rate is more than KZT 8 for RR 1, the market shows drastic drop down in hard currency demand, because said currency appears way too expensive.  Another powerful curb is the 50% growth in value of imports in other hard currencies.

When I say, that we need the USD-KZT rate at 1,000 (or 12 for RR 1), that is something that needs to be achieved, if at all possible. KZT 620-670 is the habitual “lame rate”, but to proceed development, we must have 1,000. If to draw analogy to healthcare, the picture is as follows – 620-670 is the comfortable regime for an aching diarthrosis, so to help it recover, they stretch it or put load on it, causing more pain and discomfort to its owner.  KZT 1,000 for USD 1 – is that particular stretching and loading treatment we should go for.

Picture Below – REER (Real Effective Exchange Rate) less oil trade