Kazakh Currency Drops 22% from Oil Price

Kazakh Currency Drops 22% from Oil Price

The national currency of Kazakhstan, the Tenge, lost nearly a quarter of its public value on Thursday, reported the New York Times.

The devaluation came after the central bank of Kazakhstan announced it would cease manipulation of the currency, historically pegged to the dollar. The government decided to allow the drop as nearby countries have considered similar measures.

Over the last few weeks devaluations of the Chinese Yuan and the Russian Ruble, Kazakhstan’s main trading partners, have triggered similar moves from as far afield as Brazil and Vietnam.

The Kazakh government spent nearly $30b over the last two years propping up the currency, but with low oil prices deeply gouging government revenues, the President, Nursultan Nazarbayev, announced the policy was unsustainable for the country. Similar moves are expected for Central Asian neighbors Turkmenistan and Kyrgyzstan.

After the news was released, Bloomberg reported that traders are increasing bets on a GCC-country devaluation, perhaps in the UAE or Qatar. The Saudi Arabian peg, currently at 3.75 riyals to the dollar, is another favorite to be devalued. The oil-producing kingdom has absorbed significant losses as oil prices remain depressed.

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