Volume of deals at KASE for this week - $71.705 mln (statistics, trend)

/IRBIS, Sep.06, 99/ - Elena Korpusenko, Andrey Tsalyuk/ - With US dollar within the thirty sixth calendar week of 1999 (August 30 - September 05) 963 transactions totaling $71 million 705 thousand with the average volume of trade session $17 million 926 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 24.9 % APR. 1,006 deals for the amount of $58 million 385 thousand with average volume of a session $11 million 677 thousand were made during the previous week. In this period the speed of the devaluation of tenge has made negative 3.5 % APR. The speed of tenge devaluation against US dollar, calculated at weighted average exchange rate on September 03, on a long-term trend (from the beginning of the year) equals 85.9% APR, and on intermediate term (last 30 days) - 6.4% APR. With Deutsche mark 15 transactions totaling DEM330 thousand were made. Exchange rate of the mark has increased in one week by 2.71%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan at 140.9 % APR. With Euro 3 deals for the amount of 30 thousand Euros were made. The exchange rate of European currency has increased by 0.7%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan against Euro at 36.65% APR. First distinguishing feature of last week is an increase in volume of trades, which is explained not only by increase in sale of exporters' earnings, but also by increase in business activity after summer vacations. Currency dealers notice very high market liquidity and activity, which is saturated with both tenge and dollar. So-called "shuttle" traders and grain entrepreneurs are actively getting in on the market. Exchange of dollars in hand is getting active. Second, high speed of tenge devaluation, which is although is not record breaking, but one of the long lasting - it is being observed on the market since August 23. During last 11 days average speed of tenge devaluation is estimated at 24.05%, which seems to be a long term trend. As a result, dollar exchange rate got close to historically record levels (132.80 tenge per unit of the currency on June 14, unless unjustified leaps and bounces on May 27 and 28, which reflect rather local extreme expectations than market conjuncture, are taken into account). Dealers' poll, conducted by REUTERS on Friday, shows growing devaluation expectations. Dealers emphasize on several reasons, including: - expected growth in products and services of natural monopolists (energy sources); - possibility of Russia's default, which could make it impossible to place eurobonds by Kazakhstan in September on acceptable terms, as it has been planned; - beginning of payments on Kazakhstan's main debt in fall; - fulfillment of its liabilities by the National Bank for its depositors on indexed deposits; - necessity for redemption of syndicated borrowings by the banks of the second tier. The market is "up", but the authorities do not take attempts to stabilize it. Dealers feel it. Psychological resistance level at 132.20 has been passed through almost without any obstruction. Another level of 132.70 - 132.80 is still to come. If the National Bank allows the dollar to go even higher, it can be a signal to the market to direct all free assets into currency sector. In this case, long term and systematic increase in monetary mass would fight against authors of gold and foreign exchange reserves replenishment program, which is to be done by purchasing dollars in domestic market, and demand escalation and growth of dollar exchange rate will be difficult to stop. Analysts at IRBIS expect the National Bank will intervene with dollar circulation sector to stabilize dollar's exchange rate. It is hard to say whether it will do so and how successful this action will be. The market feels that risks associated with the currency are increasing and its participants are taking more preventive measures to protect their assets from coming devaluation and inflation.