About the situation at financial market in May of 2004 - National Bank of Kazakhstan

/National Bank of Kazakhstan, June 11, 04/ - Below is the prescheduled press- release of the National Bank of Kazakhstan in full volume, which is dedicated to the situation at the republic's financial market in May of 2004 (note of IRBIS). INFLATION According to official data of Kazakhstan statistics agency, in May of 2004 inflation fell from 0.4% in April to 0.2% in May (in May of 2003 - 0.1%). Foodstuffs rose by 0.1%, whereas prices for nonfoods - 0.3%, and services - by 0.2%. Following products rose in price in greatest degree in the structure of foodstuffs in May of 2004: meat - 2.2%; bread - by 0.6% (7.0% for 5 months). Following products became cheaper: eggs - by 3.3%, milk and dairy produce - by 2.4%, sugar - by 1.1%, rise - by 0.4%, vegetables - by 2.1%. Nonfoods grew in price due to growth of prices for clothes - by 0.7%, for household textile products and dishes - by 0.7%. At the same time prices for gasoline fell by 0.9% (since the beginning of the year - by 12.8%). Among paid services no significant growth occurred excluding tariffs for public utilities - 1.1%, cultural services - by 0.5% as well as centralized gas supply 1.1%. Since the beginning of the year inflation rate equaled to 2.1% (in 2003 - 2.2%), prices for foodstuffs rose by 3.1%, for nonfoods - by 0.7%, for paid services to population - by 1.3%. In May of 2004 inflation in annual expression equaled to 6.6% (In April 2004 - 6.5%). INTERNATIONAL RESERVES AND MONEY AGGREGATES In May of 2004 net international reserves of the National Bank rose in current prices by 5.7% to USD6548.1 m. National Bank's currency purchasing at domestic currency market and currency inflow to the accounts of the Ministry of finance promoted to growth of net currency reserves (HC) by USD340.3 m. Assets in gold rose by USD14.4 m. as the result of operations made by the National Bank and growth of its price at the world market by 1.7%. Country's international reserves as the whole, i.e. including money of the National Fund (according to preliminary data USD3695.0 m.), grew in May by 3.2% to USD10.2 bn. Increase in net international reserves of the National bank in May of 2004 caused a monetary base to expand by 13.9% to KZT360.4 bn. In April 2004 monetary base expanded by 3.5% to KZT1,090.3 bn. The main reason for expansion was increase in net international assets of the banking system by 9.2%. Cash in circulation (M0) in April grew by 4.9% to KZT257.0 bn, while deposits in banking system within money supply structure - by 3.1% to KZT833.4 bn. Deposits grew at a rate which is greater than growth rate of cash in circulation in April, and caused a decrease in the share of the latter within the structure of money supply from 76.8% to 76.4% Multiplier rose from 3.24 to 3.45 due to the fact that money supply grew at faster rate than monetary base. FOREIGN EXCHANGE MARKET High level of world prices on major export goods enacted large inflow of dollars and appreciated tenge. During the month KZT/USD rate fluctuated at 136.35- 137.90. Within month tenge appreciated by 0.72% (for January - 2.73, February - 0.19%, March - 0.16%, April - 0.53%) and by the end of the month its rate at the Exchange established at KZT137.20 per dollar. Nominal tenge appreciation versus US dollar from the beginning of the year totaled 4.28% (April end 3.59%, March end 3.07%). Weighted average exchange rate of tenge versus dollar for 5 months totaled KZT138.85 per $1. In May the volume of deals made at the Exchange taking into account additional trades increased in comparison to April by 5.5% and equaled $575.6 m (from the beginning of the year the volume of deals made at Exchange totaled $2.8 bn). In over-the-counter the volume of operations increased relative to previous month by 9.2% and reached $704.7 m (from the beginning of the year $3.2 bn) For four months real exchange rate against currencies of major trade partners increased by 4.8%. Real Effective Exchange Rate (REER) against CIS countries grew up - 0.4%, the rest of the world - 7.3%. In general level of external competitiveness for 4 months of 2004 is more favorable than it was in 2001, 2000. GOVERNMENT SECURITIES MARKET In May of 2004 the volume of securities issued by the Ministry of Finance decreased relative to April 2004 by 2.4 times to KZT7.8 bn. Redemptions of the Ministry of Finance bonds totaled KZT5.7 bn. The volume of securities outstanding rose by 1.8% to KZT189.9 bn relative to previous month figure of 186.6 bn. In May of 2004 auctions were held on floatation of MEOKAM with 6 and 12 years to maturity. The yield did not change and was as following: 6-year MEOKAM. For 12-month bonds yield fell from 5.11% to 5.06%. The volume of notes issued by the National bank in May 2004 in comparison to April 2004 fell by 48.3% to KZT27.9 bn, with yield falling from 5.04% to 5.00%. Redemption volume - 18.0 bn. The volume of outstanding notes in May increased to KZT305.3 bn by 3.6%. In May of 2004 relative to previous month the volume of deals on direct repo fell by 16.1% and reached KZT55.8 bn (Jan - 61.1 bn, Feb - 59.4 bn, March - 71.0 bn). No reverse repo operations were made. DEPOSITS Total aggregated deposits of residents rose by 3.1% (from the beginning of the year - by 13.8%) and reached KZT833.4 bn ($6.0 bn). National currency deposits rose by 1.3% to KZT446.5 bn, while deposits in foreign currency grew by 5.2% and reached KZT386.9 bn ($2.8 bn). As a result proportion of tenge deposits fell from 54.5% to 53.6%. Legal entities deposits grew by 2.6% to KZT469.1 bn, individuals - 3.6% to 364.3. Deposits from private clients (incl non-residents) rose within the month by 3.6% to KZT371.4 bn. Within private clients deposits structure, tenge deposits grew by 3.4%, foreign currency denominated deposits rose by 3.8% to KZT212.2 bn. As a result the weight of tenge deposits did not change (42.9%). In April weighted average interest rate on tenge demand deposits placed by non- banking juridical persons totaled 3.0% (in March 2004: 2.9%), while on deposits collected from physical persons the rate was 9.2% (9.4%). CREDIT/LOAN MARKET Total aggregated senior debt of banks rose by 5.6% (from the beginning of the year by 11.9%) and reached KZT1094.0 bn (USD7.9 bn) Loans in national currency grew by 4.8% and totaled KZT508.1 bn, while in foreign currency it rose by 6.3%, and reached KZT586.6 bn ($4.2 bn). Proportion of tenge loans - grew from 46.7% to 46.4. Long-term loans grew by 5.8%, reached KZT709.9 bn, short-term loans grew by 5.3%, reached KZT386.7 bn. The portion of long-term loans from 64.6% to 64.7%. Bank loans granted to small and medium-sized enterprises increased within a month by 1.9% and totaled KZT233.8 bn. In April weighted average interest rate on tenge loans granted to non-banking institutions reached 15.0% (14.9% in March), while loans to private clients carried an interest rate of 21.5% (21.4%). [2004-06-11]