Analytical commentary

The economy of Kazakhstan is focused on mining and exports, and therefore it is subject to increased risks of exchange rate volatility and the need to cover peaks in the demand for foreign currency. In this regard, international reserves are of particular importance for the country.

Since 2001, the National Bank of the Republic of Kazakhstan (NBRK) has resorted to both foreign exchange interventions and direct allocations. Nevertheless, as of the end of 2021, the NBRK managed to keep international reserves at about 18.5% of GDP. This result is impressive, and the regulator achieved it regardless the huge currency injections in 2014–2015, which in total were commensurate with the current level of international reserves.

At the end of last year, Kazakhstan's international reserves amounted to USD 34.4 bln, which was higher than the total net interventions of the NBRK in 2001–2021 (USD 31.7 bln in 2021 prices). It should be noted that the lion's share of net interventions took place in 2014–2015, because in the end of 2014, Russia, a major trade partner of Kazakhstan, switched to a new currency regime, which led to the weakening of the Russian ruble against the tenge and caused a roaring demand for foreign currency In Kazakhstan. Accordingly, one of the key risks that, if materialized, can deplete the country's international reserves is the risk of a need for large-scale currency injections.

The question of whether to expect the occurrence of a similar risk is the cornerstone in understanding the sufficiency of the NBRK's international reserves. In 2014–2015, the rush demand for foreign currency in Kazakhstan was caused by the dynamics of the cross exchange rates of the ruble and the tenge against the US dollar, which in turn was due to the fact that the Russian regulator switched to free exchange rate regime earlier than its Kazakh counterpart.

By now, both Russia and Kazakhstan have gone through a difficult process of transition to a new currency regime, so the risk of similar currency needs, in ACRA's opinion, is much lower today. Consequently, the NBRK has reserves high enough to cover more than twenty years of interventions in net terms, which forms a sizeable foreign exchange cushion for the Kazakhstan economy.

Figure 1. International reserves of Kazakhstan and annual net interventions of the NBRK 


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Zhannur Ashigali
Director, Project Manager for Central Asian Cooperation, Sovereign and Regional Ratings Group
+7 (495) 139 03 02
Svetlana Panicheva
Head of External Communications
+7 (495) 139 04 80, ext. 169
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