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

/IRBIS, Sep.13, 99, Elena Korpusenko, Andrei Tsaluk/ - With US dollar within the thirty seventh calendar week of 1999 (September 06 - September 12) 930 deals totaling $57 million 460 thousand with the average volume of trade session $11 million 492 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 107.9 % APR. 963 deals for the amount of $71 million 705 thousand with average volume of a session $17 million 926 thousand were made during the previous week. In this period the speed of the devaluation of tenge has made negative 24.6 % APR. The speed of tenge devaluation against US dollar, calculated at weighted average exchange rate on September 12, on a long-term trend (from the beginning of the year) equals 88.2% APR, and on intermediate term (last 30 days) - 33.3% APR. With Deutsche mark 29 deals totaling DEM500 thousand were made. Exchange rate of the mark has increased in one week by 0.35%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan at 18.4 % APR. With Euro 4 deals for the amount of 125 thousand Euros were made. The exchange rate of European currency has increased by 2.6%, which corresponds to weekly average speed of revaluation of national currency of Kazakhstan against Euro at 133.4% APR. The main event of the week is an erratic acceleration of the devaluation, which made the dollar to strengthen against tenge in one week by 2.68 tenge at once. Current devaluation speed grew four times. The agency IRBIS pointed out several times during the week its view of reasons for this acceleration. Not only the results of analysis of current situation and previous leaps, but also comments of currency dealers, given during the week at talks with IRBIS specialists and at interviews to REUTERS are taken into account. Major factors influenced on fast acceleration of devaluation of tenge against dollar in this week are given below in order of their importance: Not a certainly positive information penetrating into the market about the talks with IMF mission working in the country caused a sharp acceleration of market participants' expectations of the devaluation. These expectations, in turn, caused the demand of bank clients and the banks themselves for dollars to grow. But the National Bank did not intervene in the situation on the exchange market, just like it did not on May 27-28 during the previous visit of IMF to Kazakhstan. Information regarding the volumes of fall settlement of external debt of Kazakhstan, appeared in printed media before and during this week, vividly depicted the difficulty of the current situation with the budget and induced additional devaluation expectations on the market. Moreover, these expectations were not eased by the information of the results of talks with IMF. Gradual increase of demand for dollar from Kazakhstan importers since September reached its critical level and was due to two reasons: drop of rouble against dollar in Russia (from 24.81 on September 01 down to 25.87 on September 03, based on official exchange rate) and information about putting off the date for barring import of goods without mandatory labeling in Kazakh and Russian languages by Kazakhstan from October 01, 1999 till February 01, 2000. Influence of this factor was strengthened by holidays in the USA, which did not allow exporters to get their currency earnings for sale at KASE. Therefore, local deficit of dollar supply was formed at the Exchange on Monday and Tuesday. "Wait-and-see" position taken by exporters pitched in the growth of dollar, and they did not hurry to sell off their dollars at KASE during a significant hastening of the devaluation: on September 07 and 08 supply volume was very low, and on September 09 there were no dollars of exporters' earnings on the trade floor. Introduction of customs fee (1%) from September 19 on US dollars in hand brought in by legal entities could force some banks to create additional orders for importing a currency in hand, which made Exchange's demand for non-cash dollars to grow. Factors mentioned above and other subjective factors added to the general mood of the market, which was saturating with free tenge during last few months. Due to underdeveloped economy and usual low level of business activities in summer these means could not be used in the sector of real production and were tied to super short notes of the National Bank at 14- 15% APR. Growth in currency operations yield from 3-7% a month and a half ago to 100 and more percents in current week reallocated free assets to currency sector. Aggregate volume of demand for state securities, made by participants of auctions in last week, is estimated at 6.0 bln tenge at current official exchange rate, whereas in this week it is only 3.5 bln (proportions of volumes of actual placement is about the same). As a result, demand for dollars sharply increased, which was not met by an appropriate supply at KASE: on the contrary, supply decreased. Absence of support for tenge by the National Bank on September 06-08 got the situation even worse. It is hard to say just by looking at traders' behavior on Friday trades at KASE that the tension is lessened and the market is stabilizing after a compensatory fall of dollar exchange rate. Spreads of over-the-counter market quotations for American currency remain very big, and demand for the dollar is not shrinking. Exchange rate for a currency in cash has jumped up and induces outrageous behavior of the public. By IRBIS analysts opinion further sharp increase of dollar exchange rate is quite possible so far, and the market can be stabilized only by an active role of country's head bank, or by an unusual for the recent times sale volumes of the dollar by the exporters.