A Glimpse Of The Devaluation Endgame: Kazakhstan Runs Out Of Dollars And Euros To Sell

Late last month, Kazakhstan stormed onto the radar screens of market participants who might have been previously unaware that the country existed after central bank governor Kairat Kelimbetov moved the tenge to a free float overnight, triggering a 20%+ devaluation and serving notice that China’s new FX regime was set to have far-reaching consequences across emerging economies already hard hit by plunging commodity prices. 

In addition to plunging crude, Kazakhstan’s situation was complicated by the tenge’s relative strength vis-a-vis the Russian ruble. The attendant loss of export competitiveness was crippling the country and long story short, REER appreciation was no longer tolerable. 

After rebounding briefly at the end of August, the tenge resumed its plunge earlier this month and as of Wednesday, had fallen 9 straight days for its worst losing streak in more than two years and may well weaken further to around 350 on the dollar (although one might suggest that would be an overshoot).

It’s against that backdrop that we bring you the following from Interfax (Google translated) which reports that dollars and euros are now hard to come by in Kazakhstan:

Exchange offices Almaty and Astana have suspended the sale of US dollars and euros due to the shortage of currencies.


"Dollar selling rate is 297 tenge, but at the moment there is no stock of dollars, as well as the euro," - said the agency "Interfax" on Wednesday in a network exchange points "MIG".


At another point he noted that the currency is not for several days. "A couple of days there is no currency. Only buy dollars and euros, in the tenge no changes, so there is no currency", - said in the exchange office.


The interviewee noted that the growing demand for the currency. "People go, constantly ask dollars or euros.



Over the past two days, people who want to buy the currency, it was more than it was last week," - explained in one of Almaty exchangers.


A similar situation is observed in Astana. "US has not yet sell, call in the afternoon," - told in one of the capital exchangers.

Capital controls? An effort to protect FX reserves? You decide.