ANALYSIS: in June exporters` currency precedes flow-in significantly formed USD market in Kazakhstan

/IRBIS, Vitaliy Tomskiy, July 22, 08/ - In June 2008 volume of foreign currency transactions made in Kazakhstan Stock Exchange (KASE) reached the equivalent of USD8,354.6 m. or KZT1,008,554.0 m., relative to May of 2008, volume of deals increased by $2,480.4 m. (KZT300,218.6 m.) or by 42.2 % in USD or 42.4 % in tenge. Relative to June 2007 trade volume decreased by 19.0 % in USD and 19.9 times in tenge. The stake of the sector in stock exchange's turnover increased from 31.6 % in May, 2008 to 31.8 % in June 2008. Total of 6,336 deals (2,874) were made in June 2008 on KASE (here and further comparable figures of previous month are given in parentheses), including: in US dollars on TOD terms - 6,101 (2,513), on TOM terms - 147 (324), on SPOT terms - 70 (20); in euros - 7 (0), in Russian ruble - 11 (17). Of the whole the volume of concluded deals in June 2008 in total turnover of exchange's currency market was 99.95 % to the stake of US dollar. In previous month the stake was 99.98 %. In June morning (main) session controlled 47.9 % (44.8 %) of exchange turnover of currency market. To the stake of day session made 26.9 % (35.6 %), evening session - 25.1 % (19.5 %). In USD the volume of transactions on KASE in June 2008 reached $8,350.5 m. (KZT1,008,055.8 m.). To compare, in May 2008 this figure equaled to $5,872.8 m. (KZT708,163.1 m.), in June 2007 - $10,316.4 m. (KZT1,258,883.1 m.) In June 2008 tenge strengthened to dollar 1.83 % APR. In the previous month the corresponding index equaled to 1.94 % APR. Weighted average rate of USD to tenge, calculated on deals of the main session in June 2008 is KZT120.72 per unit, on all exchange's deals - 120.72. In May 2008 these indicators made KZT120.60 and KZT120.58 per dollar. In euro the volume of transactions on KASE in June 2008 made EUR1.81 m. on sum KZT338.4 m. (in May no deals in euro were made; in April, 2008 - EUR1.5 m. on sum KZT285.7 m.). Judging by changes of weighted average exchange rate (04.06.2008 = 186.66; 26.06.2008 = 189.20) in analyzing month appreciation of KZT/EUR was 25.1 % APR. In ruble the volume of transactions on KASE in June 2008 made RUB31,200 th. (KZT159.8 m.) (in May volume of operations was RUB33,800th or KZT172.3 m.). Judging by changes of average weighted exchange rate (01.06.2008 = 5.1050; 30.06.2008 = 5.1450) in the analyzed month the speed of tenge appreciation to ruble was estimated at 9.96 % APR. June main event for financial sector of Kazakhstan was decreasing of official refinancing rate by the National Bank and standards of minimal reserve requirements for STB on external and internal debts. In Kazakhstan refinancing rate is rather conventional and hasn't practical use. No one STB hasn't received credit resources from National Bank yet on refinancing rate. At the same time, notwithstanding declarative character, downward change of official rate (by 5 b.p. to 10.5% APR) signals on regulator's expectations, firstly of inflation rate. Meanwhile, in June inflation in annual expression made 20.0%, having reached the galloping level. Decreasing of minimal reserve requirements (to 5% on internal and 7% on other liabilities) on the contrary has the direct relation to bank sector. According to regulator, banks may flow out KZT100.0 bn., which is necessary for sector to support credit activity. At that, the growth of free liquidity will reflect on domestic currency market. Gradual increase of transactions will likely to be observed till the end of current year. It should be point out that we hasn't manage to overcome the volumes of last year. June was characterized by maximum level of total month volume of deals with American currency on KASE floor by results of fist half year of 2008 (more than $8.3 bn.). At that, STB entered the market mainly with huge supply on growth of foreign currency flow-in from exporter-companies. Trade balance surplus in January-May 2008 made $14.4 bn., what exceeds lat year indicator in 2 times. Such significant trade balance surplus will support active current balance till the end of the year (while retaining high prices on energy resources), what in mid term prospect will contribute to gradual appreciating of KZT/USD. [2008-07-22]