November 5, 2019 / 11:44 AM / 15 days ago

Kazakh tenge may weaken on fiscal concerns: Reuters poll

ALMATY (Reuters) - Kazakhstan's central bank may allow the tenge KZT= to weaken against the dollar this month as the oil-exporting nation's government needs to bridge the growing budget gap, according to a Reuters poll.

Four out of seven participants in the poll, which was carried out between Oct. 29 and Nov. 4, predicted that the currency would weaken this month. One analyst saw it trading unchanged at about 388 per dollar, and two said it would gain.

The 12-month outlook was bearish, with all seven analysts forecasting a weaker tenge. The Central Asian nation’s currency has weakened 1% against the dollar so far this year.

It has significantly underperformed in comparison with the Russian rouble - which has gained about 9% - despite the similarities between Kazakh and Russian exports, which are dominated by hydrocarbons.

Some market players believe the Kazakh authorities are manipulating the exchange rate in order to boost tenge-denominated budget revenues - although the central bank has repeatedly denied that and reported zero interventions for the last 12 months.

“These days the local currency couldn’t benefit from the rising rouble and oil as we are heading into the year-end with a huge government budget deficit,” said Aibek Burabayev,deputy director of the financial market department at ICBC Almaty.

The central government deficit stood at 813.1 billion tenge (about $2.1 billion) as of Oct. 1, up from 254.6 billion tenge a year ago. Last year, the deficit ballooned in the fourth quarter, which coincided with a significant weakening of the tenge.

Reporting by Mariya Gordeyeva; Writing by Olzhas Auyezov; Editing by Alex Richardson

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