In 2026, the dollar may exchange for 40 to 50 Kazakhstani Tenge, and we forecast a base of around 600 Tenge by the year 2027.

The Kazakhstan economy is currently experiencing a gradual slide in the tenge-to-dollar exchange rate, with fluctuations up and down becoming the new reality. This shift is primarily due to inflation, a problem exacerbated by a growing money supply.

The money supply (M3) has increased by 19.2% to 45 trillion tenge, with injections from the National Fund being the main cause. It's important to note that these funds are not created by the real economy but are the result of natural rent from oil extraction.

The increase in the money supply is outpacing the economy's real capabilities, leading to internal inflation. This inflation, in turn, is causing the price of goods, both domestic and imported, to rise.

Imports are on the rise, causing the trade balance to almost become balanced. The increased demand for foreign currency, driven by the appeal of cheaper imported goods, is further fuelling the weakening of the tenge.

Measures for de-dollarization are ongoing, aiming to reduce the presence of dollars in the country. However, the fragile currency market, with a small number of companies controlling a large portion of currency sales, makes managing these fluctuations challenging.

The government plans to implement large additional programs of state investments, which will further increase the money supply. This move, while aimed at boosting economic growth, could potentially exacerbate the current inflationary pressures and volatility in the exchange rate.

It's worth noting that Kazakhstan's economic growth is primarily driven by state investments, not the private sector. This reliance on state investments could have implications for the country's long-term economic stability.

The National Bank could have potentially smoothed out exchange rate peaks over the course of a year, without violating the principles of free currency formation. A small intervention by the National Bank could significantly reverse the exchange rate trend.

Looking ahead, the dollar is expected to gain another 6-8% or about 40-50 tenge next year, and by 2027, we'll reach a base of around 600. The price of oil, approaching $60 per barrel for Brent, could play a role in these forecasts.

However, it's important to note that there are no publicly available recent forecasts or specific publication dates from the National Bank of Kazakhstan regarding the future development of the tenge-to-dollar exchange rate.

The current exchange rate volatility could have been prevented from reaching the current level with timely intervention, according to some economic analysts. The author suggests that careful management of the money supply and coordinated de-dollarization efforts could help stabilize the tenge-to-dollar exchange rate in the future.

In 2026, the dollar may exchange for 40 to 50 Kazakhstani Tenge, and we forecast a base of around 600 Tenge by the year 2027.