Kazakh currency expected to devalue 5% in 2001

Kazakhstan's currency, the tenge, will not devalue by more than 5-6% this year, National Bank head Grigory Marchenko told Interfax news agency. He said that Inflation is targeted to drop to 6-8% this year from 9.8% in 2000. The central bank will be able to maintain the floating exchange rate policy this year that was introduced in April 1999: "The preservation of this regime will help maintain the price competitiveness of Kazakh goods on foreign markets," he said.
Kazakhstan's currency, the tenge, will not devalue by more than 5-6% this year, National Bank head Grigory Marchenko told Interfax news agency. He said that Inflation is targeted to drop to 6-8% this year from 9.8% in 2000. The central bank will be able to maintain the floating exchange rate policy this year that was introduced in April 1999: "The preservation of this regime will help maintain the price competitiveness of Kazakh goods on foreign markets," he said.

Marchenko said the National Bank plans to maintain the internal and external stability of the tenge, and keep inflation low by regulating the size of the monetary base, with interest rate policy, refinancing banks by rediscounting promissory notes, and by providing banks with short-term loans (one-day and overnight).

If inflation stays on target, the refinancing rate will drop from the current 14% to 10-11% by the end of the year, the National Bank expects. This, in turn, should encourage banks to lower the cost of loans to 12-15%, which should boost lending to the real economy. The average weighted interest rate on tenge loans to corporate clients dropped from 20.8% to 18.8% in 2000.

Marchenko said the monetary base is expected to expand by 12-15% in 2001, and the money supply is expected to grow by 25-30%, which should raise the monetization coefficient to 17.5-18%.Kazakhstan's money supply grew by 45.9% in 2000 to 399.5 billion tenge (145 tenge/$1 at the end of 2000; 145.25 tenge/$1 at present).

The country's gold and foreign exchange reserves will be maintained "at a level ensuring the coverage of at least three months" of imports of goods and services, Marchenko said. The net gold and forex reserves rose by 37.7% in 2000 to $2.094 billion.

Source: Interfax

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