In our latest article on the dedollarization, we arrive to a conclusion that the successes of the National Bank in this matter are not as significant as the financial authorities are trying to show. Now, we have prepared the table reflecting the bank deposits dynamics for the period from the end of 2009 to the end of April 2018. Thus, we shall see how the Kazakhs’ savings in the banks had been changing in real terms.
To simplify the matter for our reader, we have only collected the data on the volume of the Kazakhs’ bank deposits including those in the national and foreign currency as of the end of December and those months when the tenge exchange rate changed significantly in relation to the US dollar.
The picture we ended up with looks quite interesting.
The table's columns present the following data (successively): Fixed-term deposits, total, mln tenge; In national currency; In foreign currency; US dollar, tenge exchange rate; Fixed-term deposits, total, mln US dollars; In national currency; In foreign currency.
From the table, it follows that -
1. The economic situation in the country for the period from the end of December 2009 to the end of December 2013 had been quite adventitious. It is reflected in the fact that the total volume of the fixed-term deposits of the population had grown from $11.033 bln to $22.237 bln. In other words, more than twice. And this for the period of only four years.
2. The situation changed radically in February 2014 when the first devaluation of the national currency (named in honor of Kayrat Kelimbetov) took place. As a result, the total volume of the fixed-term deposits in the banks had decreased from $22.237 bln as of the end of December 2013 to $19.604 bln as of the end of February 2014. The savings decrease that mostly happened due to the losses resulted from the tenge devaluation constituted $2.633 bln.
3. The population’s reaction to the devaluation was the dramatic drop in the volume of the national currency fixed-term deposits. If, as of the end od December 2013, such deposits corresponded to $11.418 bln, then, as of the end of July 2015, they corresponded to only $5.543 bln.
4. For the period from the end of February to the end of December 2014, the Kazakh citizens had significantly increased the volume of the fixed-term deposits: from $19.604 bln to $21.53 bln. With that, the increase happened not only due to the tenge into the dollar conversion. The volume of the national currency fixed-term deposits had decreased by $2.817 bln for this period whereas the volume of the foreign currency fixed-term deposits had increased only by $5.743 bln for this period.
5. The switch to the free floating tenge exchange rate (or to be precise, the second devaluation in the name of Kayrat Kelimbetov) in August 2015 led to the situation when the total volume of the fixed-term deposits had dropped from $20.905 bln to $18.432 bln in just half a year. This includes the national currency deposits that had dropped from $5.543 bln to $3.002 bln. In other words, the citizens’ savings had decreased by $2.473 bln. With that, the volume of the foreign currency deposits had remained practically unchanged during this period and constituted $15.362 bln and $15.43 bln, correspondingly.
6. Then, there came the period when the National Bank under the leadership of the new Chairman Daniyar Akishev became concerned about the stabilization of the financial system and started to fight the dollarization. From the end of 2015 to the end of April 2018, the volume of the citizens’ savings in the banks had been rebuilding: from $18.432 bln to $22.444 bln. Therefore, the growth constitutes $4.012 bln.
We find it difficult to explain what had caused this development but can assume that the high earning power of the tenge deposits given the relative stability of the tenge exchange rate to the US dollar played the crucial role in it. It stimulated the depositors to convert their savings into the national currency ones: the volume of the tenge fixed-term deposits had grown by 7.789 $ bln during this period, from 3.002 $ bln as of the end of December 2015 to 10.791 $ bln as of the end of April 2018. Whereas the volume of the foreign currency fixed-term deposits had decreased by 3.777 $ bln: from 15.43 $ bln to 11.653 $ bln. Clearly, the difference between these numbers can be called the legalization achievement.
Let us make the following conjectures based on National Bank’s data:
The two national currency devaluations that took place in a relatively short period of time shocked, angered, and sobered up the Kazakh depositors since, by our crude estimates, they had lost about 5 $ bln of their savings.
The National Bank’s policy of targeting the inflation allowed the depositors, among other things, to partially compensate their losses since the deposit rates had been decreasing slowly while the tenge/US dollar exchange rate remained relatively stable.
Note that it was the most qualified of the depositors with probably larger than average fixed-term deposits that were able to bring home the bacon.
However, it would be nonsensical to talk about the depositors’ trust in the National Bank since it does not exist in principle. It is simply that the Kazakhs are using the market situation rationally and effectively by keeping one half of their fixed-term deposits in the foreign currency in order to insure themselves against yet the next devaluation and the other half — in the national currency in order to earn money. In general, the earning potential here turns out to be much higher than when one keeps the money in foreign banks let alone glass jars.