The world oil prices continue to «jump» up and down. However, due to the fact that the stability of the internal currency market has been ensured, first of all, via the administrative-enforcement methods, by the end of March 2020, the tenge exchange rate has stabilized in the corridor of 440-450 per US dollar. However, it is unclear how long this situation is going to last.

In our opinion, not for long. If only because the reaction of the TTBs clients to the situation in unclear. One should remark that not only did a significant part of them not suffer because of the March tenge devaluation since they were keeping their money on foreign currency accounts but made a nice profit as well. With that, those who seriously believed the National Bank’s statements that the dedollarization of the banking system was the agency’s long-term policy that cannot but end in success are now counting their losses.

Obviously, the losses are different for each client depending on how long a person was keeping their money in the bank and what reward they eventually received. But the fact remains, at the end of March 2020, they suffered losses, and significant ones.

Let us try and assess them.

In order to simplify the calculations, let us use the official National Bank’s exchange rate even though it is obvious that, during the recent turbulent days, many a market participants have made their deals based on different exchange rates (that were much higher or vise versa) simply because the foreign currency market (especially the cash-based one) was in a state of uncertainty, panic and distrust to everyone including the National Bank.  

Let us remind you that, as of March 1, 2020, the official exchange rate of the Kazakh national currency constituted 381.1 tenge against the US dollar whereas, as of March 30, 2020, it hit the mark of 445.84 tenge, in other words, it has dropped by 17%. 

The volume and the structure of the deposits in the TTBs (as of March 1, 2020) can be observed in the table that we have prepared based on the National Bank’s official data.

Our calculations show that, as a result of the national currency devaluation, the TTBs clients had lost almost 4 $ bln total over the course of the three weeks of March: physical bodies had lose about 2.1 $ bln and legal bodies had lost about 1.9 $ bln. Is it a lot or not?

In our opinion, it is indeed a lot; however, it could have been much worse had the National Bank and its Chairman Yerbolat Dossayev not been able to keep the tenge exchange rate at the current levels.

The question how long the stagnation of the exchange rate is going to continue remains open. Especially since physical bodies may very well disregard the imposed emergency rule, the regional quarantines and the administrative restrictions and rush to close their tenge accounts or convert them into the dollar ones. Of course, the National Bank has the capabilities of, if not suppress such attempts, but make their realization seriously difficult (which it has already done in a way by imposing additional restrictions on the cash and cashless operations with foreign currency).

With that, we have no doubt that legal bodies will act much more responsibly — simply because they have nowhere to go. What is also obvious, however, that this kind of forced stability on the Kazakh currency market is more than unstable. If only because there exist too many external and internal factors that cannot be controlled by even Akorda and the Library not to mention the National Bank; the factors that are capable of literally destroying the tenge exchange rate.

We are talking, among other things, of the fake news stating that they are going to prohibit foreign currency circulation in Kazakhstan or that all bank accounts will be frozen until the end of the coronavirus pandemics.