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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
The desk believes that the recent shift in Kazakhstan's foreign exchange policy signals diminishing state support for the tenge, which could hinder any potential appreciation. Per the full note source, the decision to remove the mandatory sale of 50% of FX export proceeds by quasi-state companies could lead to increased FX availability in the domestic market. Nonetheless, the average FX sales during this period were only around $0.3 billion per month, accounting for just 5% of total FX turnover, suggesting that this adjustment may have minimal immediate impact but reflects a broader trend of reduced state intervention.
The desk frames this adjustment as an indication of a longer-term decline in governmental support for the KZT, which may restrict its upward trajectory against the USD. This perspective is reinforced by the recent comments from Kazakhstan's National Bank Governor, suggesting a more liberated FX environment.
Despite the change in policy, the desk notes that previous FX flows from quasi-state entities contributed minimally to market dynamics, as evidenced by a mere 1.6% drop in the tenge against the dollar following the announcement on July 13. The weakening to 474 KZT per USD highlights the delicate balance of state influence as the market reacts to this shift.
The desk's outlook suggests limited upside potential for the KZT, deviating slightly from the forecasting spread, as both jpmorgan and bofa have delineated divergent views on the currency's trajectory. The desk aligns more closely with the bearish stance suggested by bofa at the lower end of the forecast range.
Firms aligned with the desk's view include jpmorgan, who foresee challenges in the tenge's appreciation due to reduced state support. Meanwhile, bofa presents a contrary outlook suggesting the potential for further weakness in the KZT, possibly reflecting global dollar strength or local economic pressures.
Investors should keep an eye on broader regional trends that may impact this view, particularly shifts in the EUR/USD dynamics or developments from the Central Bank of Russia, which could indirectly influence Kazakhstan's FX landscape.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Investors should monitor the USD/KZT level closely, particularly as it approaches the 474 mark, which could signal further downside if the trend of state support continues to wane. The desk also suggests watching geopolitical developments and commodity prices, which are closely tied to Kazakhstan's economy.
Risks to this view
A reversal in the KZT's narrative could occur if Kazakhstan's government intervenes more aggressively to stabilize the currency or if global commodity prices surge unexpectedly, strengthening the local economy and supporting KZT appreciation.
Older quick take Quick take Published 05:00 FX Kazakhstan KZT: Less support from state FX flows warrants attention Kazakhstan will abolish the requirement for quasi-state companies to sell 50% of their FX export proceeds from this week. The fundamental impact of this measure is likely to be limited, but the broader trend of declining state support for the tenge is more important, favouring our view on limited scope for appreciation under current global assumptions Starting this week, quasi-state Kazakhstan companies will no longer be required to sell 50% of their FX export proceeds Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Dmitry Dolgin Chief Economist, CIS Broader trend of gradually declining state support for FX warrants closer look The Kazakh tenge weakened 1.6% against the dollar on Friday to the level of 474 per USD after National Bank Governor Timur Suleimenov said the requirement for quasi-public companies to sell 50% of their FX export proceeds will be abolished from the week of 13 July. We think that the fundamental impact of this particular measure is likely to be limited.
But the broader trend of gradually declining state support for the FX market is more important and warrants a closer look. Over the 18 months during which the mandatory conversion requirement was in place, FX sales by quasi-sovereign companies averaged only around $0.3bn per month, equivalent to roughly 5% of domestic FX market turnover. This appears too small to have materially influenced the broader direction of USD/KZT, which traded in a wide 460-550 range over the period and appreciated significantly from late 2025.
FX sales/purchases by state and quasi-sovereign participants vs. USD/KZT Source: NBK, CEIC, Refinitiv, ING "> Source: NBK, CEIC, Refinitiv, ING Other state-related FX operations have been far more important By comparison, other state-related FX operations have been far more important. Budget-linked FX sales from the National Fund (NFRK), FX sales mirroring the National Bank's domestic gold purchases, and occasional direct FX interventions at times of excess currency volatility averaged around $1.2bn per month over the same period.
This is equivalent to roughly 20% of domestic market turnover. These flows have played a much larger role in supporting the tenge. Importantly, some of these support channels may now be diminishing.
The government's fiscal consolidation plans, if delivered, should lead to lower NFRK transfers and, therefore, lower FX sales going forward. In addition, a largely unnoticed June change to the operational framework allows the National Bank greater flexibility in executing NFRK FX sales. As a result, only $200mn of the mandated $660mn NFRK-related FX sales allocation was executed in June, with the remainder postponed to future months.
At the same time, the National Bank has resumed FX purchases for the state pension fund after the foreign-currency share of pension assets fell below the 40% target following the tenge's appreciation. These purchases totalled roughly $1.5bn during April-June and partially offset KZT-supportive FX operations. We suspect Friday's market reaction partly reflects the growing influence of portfolio investors in Kazakhstan's local markets, a theme we discussed recently.
Strong foreign interest in KZT debt has become an increasingly important support factor for the currency. But a sharp reaction to some domestic or global news is the inevitable flipside of higher non-resident presence. Overall, we continue to see the tenge as relatively resilient , supported by high real rates and portfolio inflows.
However, the gradual reduction in state FX support argues for caution and is consistent with our view that the combination of the current account deficit and elevated CPI argues against material room for KZT appreciation from current levels. We reiterate our expectations of USD/KZT remaining in the 475-500 range over the coming 12 months, under the current global assumptions . Kazakhstan FX CIS sovereigns Central banks Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Older quick take
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