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Kazakhstan devalues home currency

05 February 2009 09:50 (UTC +04:00)

Baku-APA-Economics. Kazakhstanâ€™s central bank devalued the tenge by 18 percent, joining Russia, Ukraine and Belarus in abandoning attempts to prop up exchange rates as currency reserves dwindle and the economy staggers, Bloomberg reports.
Central Asiaâ€™s largest energy producer will keep its currency at about 150 tenge to the dollar, the Almaty-based National Bank of the Republic of Kazakhstan said in a statement. The central bank is letting the tenge weaken for the first time since it started managing the currency in 2007, after draining $3.5 billion, or 16 percent, of its foreign-exchange reserves.
Two decades after the Soviet Unionâ€™s collapse, Kazakhstanâ€™s economic growth is slowing to 1 percent from 10 percent and the nationâ€™s four biggest banks have been seized by the government as part of an emergency program costing the equivalent to 20 percent of gross domestic product. Nursultan Nazarbayev, who has been president since communism ended, is looking to Moscow to take over its biggest bank, just as Russia struggles to arrest a 35 percent devaluation and Ukraine battles a 47 percent drop.
The devaluation will make it harder for banks to repay their $40 billion of foreign debt, of which $19 billion is due this year, said Nordea Bank AB, the Nordic regionâ€™s biggest bank. Stocks rallied 14 percent, the most in three months, led by commodity exporters.