The National Bank explained why the dollar has started to appreciate and what to expect next

Tengrinews.kz — Following several months of strengthening for the tenge, the dollar has begun to rise in value once again. National Bank Governor Timur Suleimenov explained the factors behind this trend, reports our correspondent.
Journalists asked the central bank chief how the US currency would perform this summer. According to Suleimenov, recent developments in the foreign exchange market should come as no surprise.

"In my view, the situation should not be cause for great surprise. The exchange rates we saw previously—around 500 tenge per dollar—occurred when oil was priced at approximately $65–70 per barrel. When our primary export, oil, nearly doubles in price, foreign exchange earnings increase. Naturally, the tenge would strengthen," he explained.

The head of the National Bank emphasized that the exchange rate is influenced not only by currency supply but also by demand. According to him, demand is largely driven by the implementation of investment projects and programs across the corporate, quasi-public, and public sectors.

"There is a seasonal factor: demand is typically lower at the start of the year and higher in the middle and toward the end. We are currently observing this seasonality," said Timur Suleimenov.

The National Bank Chairman added that exchange rate fluctuations are standard market processes.

"The dollar's movement toward weakening and then subsequent strengthening is consistent and determined by market forces," he concluded.

Earlier, Timur Suleimenov addressed the question of how a reduction in the base rate might affect the tenge's exchange rate.
As a reminder: today Kazakhstan lowered its base rate for the first time in two years. The rate was reduced from 18.0% per annum to 17%, with a corridor of +/- 1 percentage point.