ANALYSIS: in August USD/KZT rate goes on to be under pressure

/IRBIS, Vitaliy Tomskiy, September 17, 08/ - In August 2008 volume of foreign currency transactions made on Kazakhstan Stock Exchange (KASE) reached the equivalent of USD12,392.7 m. or KZT1,486,177.3 m. Relative to July of 2008, volume of deals increased by $2,908.8 m. (KZT344,889.5 m.) or by 30.7 % in USD or 30.2 % in tenge. Relative to August 2007 trade volume increased by 11.1 % in USD and 6.4 % in tenge. The stake of the sector in stock exchange's turnover increased from 32.8 % in July, 2008 to 34.9 % in August 2008. The total of 7,902 deals (12,679) were made in August 2008 on KASE (here and further comparable figures of previous month are given in parentheses), including: in US dollars on TOD terms - 6,939 (8,347), on TOM terms - 161 (1 552), on SPOT terms - 781 (2 749); in Russian ruble - 18 (27), in euros - 3 (4). Of the whole the volume of concluded deals in August 2008 in total turnover of exchange's currency market was 99.97 % to the stake of US dollar. In previous month the stake was 99.94 %. In August morning (main) session controlled 35.2 % (44.1 %) of exchange turnover of currency market. To the stake of day session made 25.8 % (21.8 %), evening session - 39.0 % (34.1 %). In USD the volume of transactions on KASE in August 2008 reached $12,388.9 m. (KZT1,485,717.4 m.). To compare, in July 2008 this figure equaled to $9,478.2 m. (KZT1,140,596.1 m.), in August 2007 - $11,156.8 m. (KZT1,396,393.8 m.) In August 2008 tenge strengthened to dollar 6.50 % APR. In the previous month the corresponding index equaled to 5.42 % APR. Weighted average rate of USD to tenge, calculated on deals of the main session in August 2008 is KZT119.96 per unit, on all exchange's deals - 119.92. In July 2008 these indicators made KZT120.35 and 120.34 per dollar. In euro the volume of transactions on KASE in August 2008 made EUR1.01 m. on sum KZT182.4 m. (in July, 2008 - EUR1.55 m. on sum KZT293.5 m.). Judging by changes of weighted average exchange rate (01.08.2008 = 187.20; 20.08.2008 = 177.50) in analyzing month appreciation of KZT/EUR was 64.0 % APR. In ruble the volume of transactions on KASE in August 2008 made RUB56,000 th. (KZT277.6 m.) (in July, 2008 - RUB77,100 th. on the sum KZT398.2 m.). Judging by changes of average weighted exchange rate (01.08.2008 = 5.1340; 29.08.2008 = 4.8650) in the analyzed month the speed of tenge appreciation to ruble was estimated at 50.48 % APR. The last month was also characterized by decreasing of USD/KZT rates. Moreover, the second wave of significant tenge appreciating began from the middle of month (as well as the first one - in the middle of July); USD/KZT rate in 11 days decreased by 59 tiyn (0.5 %). The range of trade, according to IRBIS analysts `forecast, will be within KZT120.15 and 119.50 per dollar with the record volume of $12.38 bn. for the whole history of USD trades on KASE. The major factor of such significant pressure on American currency on internal market remained considerable in-flow of export currency proceeds of primary sector companies. Internal currency market is likely to experience for some time the effect of high prices on hydrocarbons in initial 6 months of the current year, considering conditions of contract deliveries on foreign markets by Kazakhstan companies (taking into account possibility of prices fixation, applying with the tendency of market prices decreasing and high volatility). We should also pay attention on crude oil export tax in amount of $109.91 per ton, which will be introduced in May, current year and will be effective till the beginning of 2009. Necessity in payment additional custom fees increased demand on tenge on the side of exporters. At that, scale capital flow-out from financial markets, as it was fixed in Russia in August, Kazakhstan hasn't experienced mostly due to narrowness of local stock market. According to experts, the net flow-out of capital in Russia in August made about $5.0 bn. and for the first five days of September $6.5 bn. Investors left in panic equity instrument market on political risks and uncertain situation in corporate sector (Mechel and TНК- BP). In this relation, significant appreciating of USD/RUB by 5.3 % to RUB23.4697 per $1 (according to official rate of Central Bank of RF) was not surprise, what instantly affected bond market of Russia. Significant appreciating of KZT/EUR was also interesting in the previous month. EUR/KZT rate decreased by KZT11.03 or 5.6 % on significant appreciating of USD/EUR to $1.4 per EUR1. Economy of United Europe, which is nearly in stagnation, as well as oil decrease on world market, positively affected USD moods. In September, according to our forecast, internal currency market situation won't have significant changes. The technical range of trades is forming within KZT119.90 - 119.00 per $1 with downward tendency. At that, significant correction is possible after quarter tax payments from the middle of October. [2008-09-17]