Another Fed "Taper" Casualty: Kazakhstan Devalues Currency To Weakest On Record

Tyler Durden's picture


With only $24.5 billion left in FX reserves after valiantly defending major capital outflows since the Fed's Taper announcement, the Kazakhstan central bank has devalued the currency (Tenge) by 19% - its largest adjustment since 2009. At 185 KZT to the USD, this is the weakest the currency has ever been as the central bank cites weakness in the Russian Ruble and "speculation" against its currency as drivers of the outflows (which will be "exhausted" by this devaluation according to the bank). The new level will improve the country's competitiveness (they are potassium heavy) but one wonders whether, unless Yellen folds whether it will help the outflows at all. The Kazakhstan stock index is up 12% on the news...



Via Bloomberg,

The tenge, introduced in 1993 after the breakup of the Soviet Union two years earlier, weakened the most against the dollar last month since July. Kazakhstan devalued its currency by 21 percent in February 2009, as the biggest energy producer in central Asia spent billions of dollars to support the economy and bail out its biggest lenders following the collapse of Lehman Brothers Holdings Inc.


The devaluation was a surprise for many people, considering the central bank’s assurances that the exchange rate is stable,” Damir Seisebayev, director of the analytical department at ?? Private Asset Management in Almaty, said by e-mail. “But you have to be realistic. What is the tenge? It’s the ruble rate multiplied by five. This is a tested formula.”


The Kazakhstan Stock Exchange gained 12 percent after the announcement, data on the bourse’s website show.

So it must be great news, right? Just as Venezuelan stock holders...

The move reflects a combination of factors, including the steady deterioration in the current-account position, worries over the impact of weak growth in Russia and the ruble’s managed depreciation,” Tim Ash, chief emerging-markets economist at Standard Bank Group Plc. in London, said in a note today.


Charts: Bloomberg

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Tue, 02/11/2014 - 09:25 | 4423371 LawsofPhysics
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Can someone comment on the ruble?  Was thinking of taking a large position after they devalue (and they will right after the olympics).

Tue, 02/11/2014 - 09:24 | 4423375 Ulterior
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Tue, 02/11/2014 - 09:28 | 4423384 LawsofPhysics
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Can anyone else remember when you got ove 6,000 rubles per dollar?  I can.

Tue, 02/11/2014 - 09:39 | 4423404 Looney
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The new Chair-boy should be getting paid in rubles.

Oh, and if anybody can prove to me that Mr.Yellen is a Chair-girl, you may throw a rock into my face!  ;-)

Oh, and I think that Mr. Yellen and Mr. Hillary are the same man...


Tue, 02/11/2014 - 09:41 | 4423444 Atlas_shrugging
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All the other countries have inferior potassium

Tue, 02/11/2014 - 10:47 | 4423641 SAT 800
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Kazakstan; the country that invented Apples; the real apples that grow on trees; it's an interesting story.  Sounds like their currency is suffering from the hot capital sloshing around the world thingy. Lucky thing they aren't in the Euro; Greece used to just devalue every twenty years or so and stayed out of the newspapers; if you're part of somebody's monetary experiment; and you can't devalue you just have to keep pretending until pieces start to fall off.

Tue, 02/11/2014 - 13:45 | 4424255 Rafferty
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What about all their oil???

Tue, 02/11/2014 - 09:28 | 4423393 firstdivision
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Can someone tell me how to sell some call options, while shorting the underlying asset,  on the lives of Putin's friends that got the construction contracts for the Sochi games?

Tue, 02/11/2014 - 10:13 | 4423541 RaceToTheBottom
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Maybe, but Putin himself has outsourced PR to a degree only imagined elsewhere.


Time for the ZH Putin mancrush team to take a cold shower.

Tue, 02/11/2014 - 10:52 | 4423652 Flakmeister
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Seriously, what is the source of all the love here for someone who is basically a thug and a despot?

Tue, 02/11/2014 - 11:21 | 4423732 RaceToTheBottom
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My only thought re this is that he embodies some strength or decisiveness that they don't posses in their own, trivial lives.  That plus a smattering of "the enemy of my enemy is my friend".


I find it quite interesting, that may be why I enjoy needling them...

Tue, 02/11/2014 - 11:32 | 4423778 Flakmeister
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Yeah, that is definately part of it...

All those qualities that an American "Cornpone Hitler" would exhibit...

Tue, 02/11/2014 - 09:35 | 4423406 Debugas
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russian economy is faltering the monetary authorities will continue gradual ruble decline (USD will go up 1-2 rubles per year)

Tue, 02/11/2014 - 10:02 | 4423505 Mister Kitty
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The ruble and every other currency is fucked if Yellen actually tapers.  Even gold will drop like a lead balloon.  But at least the Cossacks can still eat their horses.  Bitches.

Tue, 02/11/2014 - 09:26 | 4423381 fonzannoon
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How much is gold up in Khazakstan dong today?

Tue, 02/11/2014 - 09:39 | 4423434 BandGap
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My new vacation hotspot destination!

Tue, 02/11/2014 - 09:26 | 4423382 firstdivision
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Shit! Now my Kazakies won't go as far with the hookers in Astana.

Tue, 02/11/2014 - 09:29 | 4423391 Seasmoke
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I am still amazed how much such a small Taper fucks up the rest of the World. ....... can only imagine how much dollars Bernanke really gave to foreign banks .......looks like all of it 

Tue, 02/11/2014 - 10:16 | 4423552 DaddyO
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Most astute comment of the thread so far...

Can you say pallets of C notes?



Tue, 02/11/2014 - 11:04 | 4423658 Flakmeister
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Can you say that you do not have a clue about what you are talking about and are merely projecting?

Exports are way down and for a country that exports raw materials that creates a problem...

Did it occur to you that a country that has 17% of its exports tied to Italy might be an issue?

And this chart showling capital flows should tell you something:

Tue, 02/11/2014 - 09:29 | 4423394 RaceToTheBottom
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Another EU candidate!!!!

Tue, 02/11/2014 - 09:43 | 4423451 Sudden Debt
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how nuts and stupid it may sound... you're probably right...


Tue, 02/11/2014 - 09:31 | 4423395 Seasmoke
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How is the entire World not back into Gold by now is beyond me !!!

Tue, 02/11/2014 - 09:37 | 4423425 Debugas
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majority of population has debts not savings

it is not their savings (they have no) that gets devalued but their wages

Tue, 02/11/2014 - 09:44 | 4423455 Sudden Debt
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Timmy promised it all to the Chinese back in the day

Tue, 02/11/2014 - 09:30 | 4423397 Dr. Engali
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Got gold? 

Tue, 02/11/2014 - 09:33 | 4423407 The Count
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So the American taxpayer has been propping up entire 3rd world economies? Fuck me, the Matrix boggles the mind. The world will go down sooner or later under the weight of its own arrogance and stupidity.

Tue, 02/11/2014 - 09:55 | 4423486 TrustWho
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Count.....You are right, but let us focus on ONE man who did this.....Fuck Bernanke and QE2 - QE4evar. Who gave this man this power?

Tue, 02/11/2014 - 10:07 | 4423519 kridkrid
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bernanke is a criminal, to be sure, but it's not like this trainwreck was set in motion on his watch. He didn't come up with, or start this current version of debt money loaned into existence with interest Ponzi scheme. He was merely keeping that system affloat for another period of time. People of the "we should have just taken our medicine in 2008" mindset are off by a few decades.

Tue, 02/11/2014 - 10:43 | 4423630 TrustWho
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Krid,....Read what I wrote. There was a liquidity crisis after Lehman. QE1 was appropriate. After QE1, they should have used the FDIC to re-package the TBTF Banks that failed, fixed these banks with printed money and IPOed these new entities to the public. In this process, the documents would have been discovered and the crimminals jailed. The Fed's balance sheet would have been flooded with bad mortgages, oh, but this is the current situation, so this must be ok.

Bernanke covered for his bosses pure and simple. You are right, this is the Fed chairmans' job after Volcker. I still like to believe Volcker was different, but I am probably wrong.

Tue, 02/11/2014 - 09:41 | 4423435 ThroxxOfVron
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Note to the Stackers in da Hedge: Kazakhstan issues truely gorgeous Gold and Silver coin denominated in Tenge.
Tue, 02/11/2014 - 09:44 | 4423449 Sudden Debt
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Kazakhstan... home of the...


Tue, 02/11/2014 - 09:48 | 4423472 d edwards
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If the currency is devalued and the stock market goes up is it simply because it takes more Tenge to "buy the market?"


Otherwise, you'd think a devalued currency would be a negative, no?

Tue, 02/11/2014 - 10:15 | 4423546 TrustWho
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In USA dollars, Kazakhstan stock market dropped 7%. You must remember all commodities, including oil, are priced in USA dollars. International Trading Parties can choose any currency they want, but USA dollar has historically been the currency that minimizes currency risk between the Parties. The USA Banking System, or more specifically TBTF Banks, and Ben Bernanke have put everyone at risk over the largest fraud the world has ever witnessed. The TBTF Banks used the credibility of the United States of America to sell known worthless paper and Ben Bernanke lead the cover-up through QE. NO ONE WENT TO JAIL!

Back to Kazakhstan, the citizens of the state dependent on imports are 19% worst off and Kazakhstan exporters received a huge increase in their margins.

Fuck Bernanke

Tue, 02/11/2014 - 09:49 | 4423473 Calculus99
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No problems for the Khazak Krooks, they'll just up their skim by another 10%.

Tue, 02/11/2014 - 09:54 | 4423481 TheCosmicTaco
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Time for another Borat movie...

Poor old Kazakhs, screwed by the Soviets, now dp'ed by Bernanke and Yellen's QE and ZIRP...

Emerging markets are soon gonna learn the true meaning of pain... especially when China collapses and commodity prices plunge...

Come back Borat... all is forgiven. You are a true noble son of Kazakhstan, a hero, a proud descendent of Jenghiz Khan.. we have virgins for you to fcuk... juicy ones...

Tue, 02/11/2014 - 10:00 | 4423499 gatorengineer
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cant believe I had to go all the way down to the bottom of the thread to find a Borat comment... Kuddos...

Tue, 02/11/2014 - 10:08 | 4423533 ptoemmes
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Must resist.  Must not channel Borat.


Gaaaaa - I can't resist:

Tue, 02/11/2014 - 10:15 | 4423551 Handful of Dust
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"Hecho in Kazakhstan," is not what you see very much these days.

Tue, 02/11/2014 - 10:19 | 4423553 hugovanderbubble
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All will devaluate


Tue, 02/11/2014 - 10:28 | 4423592 Spungo
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I don't understand how you can devalue a currency overnight. Isn't the exchange rate determined by the market?

Tue, 02/11/2014 - 10:30 | 4423594 TheCosmicTaco
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Borat come back. Borat make Kazakh-land rich again. All Kazakh will drive Lexus. New model, too. Borat screw all enemies of glorious Kazakhstan up the ass. Screw Yellen, screw taper, screw China, screw Rio Tinto, screw Putin, screw everybody.

Borat is good. Long live the Republic of Kazakhstan.

Ya. Borat show you who is cool.

Tue, 02/11/2014 - 10:46 | 4423595 TheCosmicTaco
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Tue, 02/11/2014 - 10:51 | 4423649 Overdrawn
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Drat, that means the cost of bribing officals and the police will go up again (:-

Tue, 02/11/2014 - 11:39 | 4423776 Dewey Cheatum Howe
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Stop taking fiat paper for your potassium on the global market....

Iranians made it work.

Tue, 02/11/2014 - 11:37 | 4423795 Bunga Bunga
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That's why these criminals want to close the exitts:



Tue, 02/11/2014 - 13:41 | 4424245 Rusty Nayle
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Tyler, you should post a 'Most Wanted List' of devalued currencies complete with pictures of notes/coins, satire and all

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