Kazakh Tenge Plunges as Middle East Truce Cools Oil Markets

The Kazakh tenge experienced a sharp depreciation on April 8, with the US dollar's weighted average rate on the Kazakhstan Stock Exchange (KASE) rising by 12.32 tenge to reach 475.31 tenge. In exchange offices in Almaty and Astana, the dollar was selling for 479-480 tenge in the morning.

This significant weakening followed a period of stability. Just a day earlier, on April 7, the dollar traded at 460.37 tenge—its lowest level since June 2024. The reversal is directly linked to geopolitical developments in the Middle East.

The announcement of a two-week truce between the United States and Iran, coupled with Tehran's stated readiness to open the Strait of Hormuz, triggered an immediate drop in global oil prices. The price of Brent crude fell by approximately 14-16 percent, dipping into the range of $91-94 per barrel.

Economists explain that this market reaction is logical and expected. "This is not an anomaly but a market reaction," stated economist Ruslan Sultanov. He noted that investors had previously priced a "geopolitical risk premium" into oil due to fears of supply disruptions via Hormuz. News of de-escalation caused that premium to evaporate rapidly.

Since Kazakhstan's currency is heavily reliant on oil exports and external commodity markets, the tenge is highly sensitive to such shifts. "The foreign exchange market began reassessing previous expectations," Sultanov emphasized, describing the tenge's fall as a correction rather than the start of full-scale currency stress.

Other experts point to additional factors influencing the exchange rate. Financial analyst Andrey Chebotarev highlighted that lower oil prices reduce foreign currency inflows into Kazakhstan while demand for dollars from importers and the budget remains high. Seasonal expenditures and regional currency dynamics also contribute to internal pressure.

The future trajectory of the tenge remains uncertain and hinges largely on events in the Middle East. "The sustainability of this trend depends entirely on whether the truce evolves into more stable de-escalation," Sultanov predicted. If optimism about peace persists, the national currency may face continued moderate pressure.

However, experts do not foresee an uncontrolled collapse. Analyst Andrey Chebotarev noted that "a sharp, uncontrolled fall is not expected," as the National Bank possesses tools to smooth volatility. The base scenario is seen as gradual weakening with fluctuations.

The National Bank of Kazakhstan has previously stated it will maintain a flexible exchange rate policy, which helps avoid imbalances and preserve gold and foreign exchange reserves.