Week volume of the transactions on USD at KASE - $ 48.870 millions (statistics, tendency)

/IRBIS, Aug.13,99, Elena Korpusenko, Andrey Tsalyuk/ - On US dollar within the thirty third calendar week of 1999 (August 09 - August 15) 764 transactions totaling $48 million 870 thousand with the average volume of trade session $9 million 774 thousand were made at Kazakhstan Stock Exchange (KASE). The devaluation of tenge for this week, calculated at weighted average exchange rate, is assessed by the trend of 8.4% APR. 891 deals for the amount $59 million 440 thousand with average volume of session $11 million 888 thousand were made during the previous week. In this period the speed of the revaluation of tenge has made 9.2% APR. The comparison of these parameters shows an essential reduction in the volume of the trades. However, one sided conclusions concerning the reduction of sales of the exporters proceeds should not be made because high volumes of the currency supply in the previous week can be caused by the sale of dollar which becomes cheaper while the trend of strengthening tenge has been formed. In this week the conjuncture changed, and an uncertainty has appeared which always results in a decrease of trades turnover. The speed of tenge devaluation towards US dollar, calculated at weighted average exchange rate on August 06, on a long-term trend (from the beginning of the year) equals 92.6% APR, and on intermediate term (last 30 days) - minus 5.8% APR (tenge revalued). On Deutsche mark 19 transactions totaling DEM 625 thousand were made. The rate of the mark has fallen in one week by 0.52%, which corresponds weekly average speed of revaluation of national currency of Kazakhstan at 26.9% APR. On Euro 5 deals for the amount of 55 thousand Euros were made. The exchange rate of European currency has grown by 0.11%, which corresponds weekly average speed of revaluation of national currency of Kazakhstan at 5.8% APR. The activation of trades on Euro has been noticed. This week was restless. A failure of negotiations with IMF on Monday concerning opening the new line of credit and resignation of Russian government have made the financial market of the republic nervous. Banks did take advantage of the situation. In a background of maintaining the tendencies and disposition of forces affecting the exchange rate formation (the growing money base, plenty of free money on correspondent accounts, government interest in a stable tenge and maximum attraction of assets for financing the budget deficit) attempt was taken to form the bulls market for the dollar. Apparently, some banks waited for some turbulence in the market. However, government representatives stated that the situation is not only under their control but also backed their words with deeds by limiting dealers speculative activities on the trades at KASE on August 10 and 11, thus, making it clear to the banks, that the unreasonable fluctuations of the exchange rate will not happen. Last day stands out from other days of the week when dollar gained 29 points at the trades without any resistance from the National Bank. The results of the analysis conducted by the experts of IRBIS show that objectively jump of dollar exchange rate on Friday is not sufficient to speak about the beginning of the new tendency. Now task of the National Bank is to maintain stable exchange rate. Prolonged decrease of the exchange rate as well as expected by the National Bank its higher than the yield of notes increase will result in redistribution of free money of banks for the benefit of the currency sector. In turn, it will deprive the National Bank of an opportunity to work with a positive balance of net borrowing in the primary market for State Securities and, as the consequence, it will create difficulties with the replenishment of foreign exchange reserves by purchasing of dollar in domestic market. The growth of dollar exchange rate by 29 points on Friday has resulted in a weekly average devaluation speed change. Until this Friday it made negative 5.7% APR and by taking into account the trades of August 13 - positive 8.4% APR. Revaluation was replaced by devaluation; however relative change has not exceeded the rate on the notes. Hence, this jump is not critical for the National Bank. At the same time the psychological factor should not be underestimated. Prolonged decrease of cost of dollar in Kazakhstan has strengthened expectations of the devaluation, and the relative cheapness of American currency provokes its buying by both banks and the population. The market is saturated with tenge. Only the signal is waited for. It is possible that growth of dollar exchange rate on Friday could serve as a signal. On August 13 at noon exchange centers of Almaty were already out of the dollar; the exchange centers' operators hold the currency, anticipating reaction of the population in weekends. Taking into account all these, IRBIS still has an option that on Monday organized and one sided demand (not a speculative) from the banks of the second tier may emerge at the Exchange. Also, the volume of the sale of exporters' earnings is not so big. The significance of the dollar exchange rate increase under the pressure of this demand will depend on the National Bank's position at the trades which is, as you know, poorly predictable. Most likely scenario, by IRBIS analysts' opinion, is the resistance level of 132 tenge per dollar. It is this National Bank's tactics that could bring the market back to its usual course of flow which is needed not only by the National Bank alone but also by the Ministry of Finance and the government as well.