ANALYSIS: in May USD transactions volume decreases on the background of improvement of short term tenge liquidity

/IRBIS, Vitaliy Tomskiy, June 20, 08/ - In May 2008 volume of foreign currency transactions made in Kazakhstan Stock Exchange (KASE) reached the equivalent of USD5,874.2 m. or KZT708,335.3 m., relative to April of 2008, volume of deals decreased by $2,269.6 m. (KZT272,862.0 m.) or by 27.9 % in USD or 27.8 % in tenge. Relative to May 2007 trade volume decreased by 17.6 % in USD and 17.5 times in tenge. The stake of the sector in stock exchange's turnover decreased from 34.5 % in April, 2008 to 31.6 % in May 2008. Total of 2,874 deals (4,536) were made in May 2008 on KASE (here and further comparable figures of previous month are given in parentheses), including: in US dollars on TOD terms - 2,513 (4,292), on TOM terms - 324 (167), on SPOT terms - 20 (50); in euros - 0 (3), in Russian ruble - 17 (24). Of the whole the volume of concluded deals in May 2008 in total turnover of exchange's currency market was 99.98 % to the stake of US dollar. In previous month the stake was 99.95 %. In May morning (main) session controlled 44.8 % (39.2 %) of exchange turnover of currency market. To the stake of day session made 35.6 % (30.4 %), evening session - 19.5 % (30.4 %). In USD the volume of transactions on KASE in May 2008 reached $5,872.8 m. (KZT708,163.1 m.). To compare, in April 2008 this figure equaled to $8,139.7 m. (KZT980,704.1 m.), in May 2007 - $7,127.7 m. (KZT857,797.0 m.) In May 2008 tenge strengthened to dollar 1.94 % APR. In the previous month the corresponding index equaled to 3.08 % APR. Weighted average rate of USD to tenge, calculated on deals of the main session in May 2008 is KZT120.60 per unit, on all exchange's deals - 120.58. In April 2008 these indicators made KZT120.46 and KZT120.48 per dollar. In euro no deals were made on KASE in May 2008 (in April 2008 the volume of deals made - 1.5 m. euro (KZT285.7 m.)). In ruble the volume of transactions on KASE in May 2008 made RUB33,800 th. (KZT172.3 m.) (in April volume of operations was RUB40,500th or KZT207.4 m.). Judging by changes of average weighted exchange rate (01.05.2008 = 5,0847; 30.05.2008 = 5,1050) in the analyzed month the speed of tenge appreciation to ruble was estimated at 4.97 % APR. In May as in April the USD exchange market was rather calm. The price range of trades remained the same and formed between 120.40 - 120.75. It should be pointed out that in May market made correction movement upward after saw tenge appreciation since March beginning on the background of some deficit of tenge liquidity, which appeared due to quarter tax payments in April. By the middle of the month, bid of American currency on the market again prevailed on the background of increased export currency proceed of primary sector companies and at first oil production companies. Continuing growth of oil prices on the world markets (since the beginning of 2008 more than 67 %) reduced negative pressure on national currency, aroused by world credit crisis and contraction of loan capital markets for Kazakhstan bank sector. Trade balance surplus in Q1 2008 increased by $8.7 bn. This value became maximum quarter growth since the beginning of 2006. At first, prices on Kazakhstan main export commodities played their part in slowing down of import to 8.6 % (in the Q4 2007 the growth made 26.4 %). KZT/USD appreciating in long term prospect looks more probable. At the same time, evening rate fluctuation policy of the National Bank will contribute to retain of the current price range till the end of the year. The series of intervention, made by regulator in May supported American currency to exclude undesirable speculative fluctuations. As a result, by the June beginning the market returned to the price range of March. Judging by the beginning of June, bid of US dollar on market will increase, though can be compensated by significant volumes of STB`s external debt maturity, which second wave came to August (about $720 m.). In IRBIS specialists` opinion, in June the main event for the market will be the meeting of the National Bank Board, on June 23. As expected the main questions will be examining of refinancing rate for Q3 and introduction of new minimal reserve demands. According to the forecast, MRD` standards on external liabilities will decrease from 8 % to 6 %. [2008-06-20]