July 9, 2020 / 5:16 AM / a month ago

UPDATE 1-Current account, rouble may weigh on Kazakh tenge in H2, says c.bank

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ALMATY, July 9 (Reuters) - The Kazakh tenge may come under pressure in the second half of this year from an expected current account deficit and a possible weakening of the Russian rouble, Kazakhstan’s central bank said on Thursday.

The bank expects the oil-exporting Central Asian nation’s current account gap to widen to $9.9 billion this year from $6.5 billion in 2019. Kazakhstan’s current account was in the black in the first quarter and the bank said it could swing into deficit later this year.

“We see a lot of news regarding the possible weakening of the rouble: the increase in anti-Russian sanctions rhetoric as well as the decrease in foreign currency sales... by Russia’s finance ministry which reduces support for the rouble,” deputy central bank governor Aliya Moldabekova said in a statement.

“The potential weakening of the rouble, the currency of one of our main trade partners, carries downside risk for the tenge.”

The central bank said it sold $1.4 billion from the rainy-day National Fund on the domestic market in June. Such sales are designed to enable the transfer of money to the state budget, but also help to prop up the local currency. (Reporting by Olzhas Auyezov; Editing by Jacqueline Wong & Shri Navaratnam)

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