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Kazakhstan surprises with big devaluation of its currency

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Kazakhstan surprises with big devaluation of its currency
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Kazakhstan has devalued its currency, the tenge, by 19 percent.

It had been undermined by Russia – its main trading partner – allowing the rouble to slide.

Moscow did that as investors bailed out of emerging market currencies due to the scaling back of US monetary stimulus.

Kazakhstan also has a worsening balance of payments problem from rising imports, mainly of consumer goods.

The size of the devaluation was a surprise. It is far larger than the rouble’s five percent decline this year.

“From a qualitative perspective it makes sense. The quantity… is way too much,” said Ivan Tchakarov, a Moscow-based economist at Citi who covers Russia and the Commonwealth of Independent States.

Analysts said the Central Asian nation seemed determined to put a floor under its currency, which is important as it is a big exporter of energy and commodities.