ASTANA, Kazakhstan: Kazakhstan has been ‘compensated’ by the Asian Development Bank (ADB) after devaluation in its currency against the US dollar.
The ADB has approved a $1 billion loan for the energy-rich country. The Central Asian country’s currency, the tenge, fell a record 23 percent on Thursday following the country’s switch from a costly currency corridor with the dollar to a free-floating exchange rate as the country battles to cope with lower oil prices.
“This loan from ADB’s Countercyclical Support Facility will give the country the fiscal leeway it needs to mitigate the unanticipated and significant negative impacts of the steep decline in world oil prices and the economic slowdown of the neighbouring countries,” said Lotte Schou-Zibell, principal economist in ADB’s Central and West Asia department.
Kazakh President Nursultan Nazarbayev said Thursday the switch to the free-floating exchange rate was a “necessary step” given gloomy medium-term forecasts for oil prices and exporters’ demands for a more competitive exchange rate.
The damage to the tenge – which is currently trading at 252.47 to the dollar – has sent ripples through ex-Soviet Central Asia, a region threatened by depressed global hydrocarbon prices and economic chaos in Russia.
