Volume of deals at KASE for this week - $58.385 mln (statistics, trend)

/IRBIS, Aug.31, 99, Erlan Mameshev, Andrei Tsaluk/ - With US dollar within the thirty fifth calendar week of 1999 (August 23 - August 29) 1,006 transactions totaling $58 million 385 thousand with the average volume of trade session $11 million 677 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 3.5 % APR. 1,117 deals for the amount $66 million 615 thousand with average volume of a session $13 million 323 thousand were made during the previous week. In this period the speed of the devaluation of tenge has made negative 1.9 % APR (tenge revalued). The speed of tenge devaluation against US dollar, calculated at weighted average exchange rate on August 27, on a long-term trend (from the beginning of the year) equals 87.3% APR, and on intermediate term (last 30 days) - negative 2.3% APR (tenge revalued). With Deutsche mark 23 transactions totaling DEM455 thousand were made. The rate of the mark has fallen in one week by 1.23%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan at 64.0 % APR. With Euro 13 deals for the amount of 165 thousand Euros were made. The exchange rate of European currency has fallen by 1.06%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan against Euro at 55.2% APR. Last week of the exchange market was a typical one for developing an exchange rate within a one-sided trend. IRBIS analysts point out today it was impossible to change the exchange rate in either direction. On the one hand the government is not interested in sharp devaluation of tenge. Both for political and economic motives. The first motive is coming elections, where as much social tensions should be driven away as possible. The second motive - necessity of increasing gold and foreign exchange reserves by purchasing dollars in domestic market at the lowest possible price, lowering servicing costs for indexed at devaluation internal debt expressed in tenge, and attracting significant amounts in the market for state securities at acceptable rates to finance state budget deficit. One-sided and fast growth of dollar exchange rate hinders the implementation of this program. Therefore, mandatory sale of half of exporters' earnings remains in force and stabilizes the dollar exchange rate. The National Bank's behavior also has an influence on trades with US dollars which is to prevent sudden exchange rate fluctuations caused by speculative acts of the traders. On the other hand, the market is saturated with free tenge, and a slight depreciation of an American currency provokes its purchase by the banks and by the people. This factor, along with constant demand for dollars from the National Bank, prevents the market from plummeting. Behavior of the banks of the second tier at the trades in this week was adequate to the current situation and the major task of the dealers was to "swing" the market within 131.50 - 132.20 tenge per dollar. Almost balanced market at the beginning of the week, where traders' speculations were unnoticeable (some banks were mainly buying dollars, others were selling), began to change gradually. Starting Wednesday the trend of strengthening dollar becomes apparent. Demand of the banks of the second tier grows. Still, one-sided and organized demand is not created. On Thursday and Friday there were not a single trader who would hold the trades in a proper manner. Most of the participants leave the trade floor with zero net turnover, by selling and buying large amounts of dollars. Banks do not believe in lengthy trends of dollar exchange rate growth. High demand from the banks of the second tier on Thursday and on Friday was partially caused by three day week-end, where the dealers do not want to have tenge. Therefore, some dealers were only buying (usually, in small amounts) dollars. Results of the analysis allow analysts at IRBIS to assume that the growth of dollar exchange rate can possible change into its decrease in coming week as it happened seven days ago. Those who bought dollars at 131.60 - 131.70 will start to sell them at 131.90 - 132.00 which will make the demand to exceed supply and will bring the market back to its previous state. Nothing significantly changes in the financial market of Kazakhstan for almost a month now. The government manages to implement its intended program of increasing gold and foreign exchange reserves and state budget financing by keeping the market in the direction favorable to the Ministry of Finance and the National Bank. Slight and bi-directional dollar exchange rate fluctuations make the banks and their clients to invest large amounts of free money into short term notes. Due to the amounts received the National Bank can buy dollars without issuing tenge, and support the Ministry of Finance in the market for primary placement of MEKKAM and MEKAVM. Thanks to this support the Ministry of Finance pays out its debt to people and tries to alleviate social tensions before incoming elections. Most participants of the market agree that somewhat significant changes are possible only after October 10. However, if the government will succeed in selling its 25% block of shares of "Tengizchevroil" no currency catastrophes should be expected till the end of the year. The government will have means to stabilize the market for a long time.