/IRBIS, Vitaliy Tomskiy, November 26, 08/ - In October 2008 volume of foreign currency transactions made on Kazakhstan Stock Exchange (KASE) reached the equivalent of USD12,273.0 m. or KZT1,471,409.8 m. Relative to September of 2008, volume of deals decreased by $5,104.0 m. (KZT608,268.5 m.) or by 41.2 % in USD or 40.9 % in tenge. Relative to October 2007 trade volume increased 2.5 times in USD and in tenge.

The stake of the sector in stock exchange's turnover decreased from 40.6 % in September, 2008 to 32.3 % in October 2008.

The total of 8,682 deals (5,977) were made in October 2008 on KASE (here and further comparable figures of previous month are given in parentheses), including: in US dollars on TOD terms - 6,699 (4,661), on TOM terms - 520 (506), on SPOT terms - 1 310 (782); in Russian ruble - 23 (23), in euros - 3 (5).

Of the whole the volume of concluded deals in October 2008 in total turnover of exchange's currency market totaling 99.96 % of the US dollar resembling the previous month's 99.97 %.

In October morning (main) session controlled 29.8 % (23.5 %) of exchange turnover of currency market. Day session made up 13.7 % (19.0 %), and evening session - 56.5 % (57.5 %).

In USD the volume of transactions on KASE in October 2008 reached $12,268.7 m. (KZT1,470,891.5 m.). To compare, in September 2008 this figure equaled to $17,372.2 m. (KZT2,079,105.9 m.), in October 2007 - $4,964.7 m. (KZT599,952.2 m.)

In October 2008 tenge strengthened to dollar 0 % APR. In the previous month the corresponding index equaled to 2.09 % APR.

Weighted average rate of USD to tenge, calculated on deals of the main session in October 2008 is KZT119.87 per unit, on all exchange's deals - 119.89. In September 2008 these indicators made KZT119.70 and 119.68 per dollar.

In euro the volume of transactions on KASE in October 2008 made EUR1.55 m. at the sum KZT246.9 m. (in September, 2008 - EUR1.52 m. at the sum KZT261.8 m.). Judging by changes of weighted average exchange rate (30.09.2008 = 172.50; 24.10.2008 = 153.70) in analyzing month appreciation of KZT/EUR was 82.73 % APR.

In ruble the volume of transactions on KASE in October 2008 made RUB59,400 th. (KZT271.5 m.) (in September, 2008 - RUB66,000 th. at the sum KZT310.6 m.). Judging by changes of average weighted exchange rate (02.10.2008 = 4.6650; 31.10.2008 = 4.4560) in the analyzed month the speed of tenge appreciation to ruble was estimated at 43.87 % APR.

In October deterioration of foreign market situation continued. At that liquidity crisis is gradually pertain to the real economy sector. Demand reducing is observed everywhere as energy resources prices show falling. In October Brent oil average price resulted in $73.68 a barrel, decreasing relative to September by 26.59 %, January 2008 - by 8.44 %.

A that the world financial system, which is almost paralyzed, is still under the influence of regular mass quit and bankruptcy.

On this background risk sensibility is decreasing. Liquidity crisis and downfall of stock markets, followed after force participants to sell risk assets, which contribute to sharp USD demand growth (till 70 % of all international transaction in USD).

All this expose to a risk so called primary currencies, which mostly depend on world market conjuncture. Tenge refers to this type of currencies.

In October the pressure on KZT/USD rate continued after mentioned factors and foreign funding market closing for banking sector, which were again downgraded at the beginning of the month.

At that the volumes of concluded deals on KASE currency floor decreased on tenge liquidity reducing (KazPrime indicator grew by 1.9 b. p. to 8.92 % APR in a month) and observed USD demand growth. It contributed to currency swaps deals growth (the stake of the session with forward calculation exceeded 50 %), due to them banks supported "long" positions on dollar.

From the viewpoint of technical analysis, in October USD/KZT rate was in rather upward trend that was developing since the mid September. But regulation factor damping position and inflation targeting policy contribute to moderate growth of USD/KZT rate.

According to the forecast of the National Bank inflation will be at 2.9 - 3.1 % in the fourth quarter of 2008 that corresponds to the annual inflation at 11.0 - 11.2 % at the end of December 2008. Official bodies are likely to review the previous forecast on inflation for the current year (not higher than 10 %).

At that in case of sharp USD rate growth, prices on import commodities will also grow on forthcoming holidays, notwithstanding restricted consumer demand in the current year.

In this regard we expect insignificant fluctuations in exchange rate at KZT121.0 per $1.

[2008-11-26]