kazakhstan-currency-exchangeMarket analytics group Forex Club announced this week that Kazakhstan’s tenge is among the least valuable currencies in Europe. While the Kazakh Central Bank blames the depreciation on falling oil prices, analysts say the situation is far more complex and point to systemic mismanagement.

From 2014-2015, the tenge suffered a 124% devaluation in relation to the US dollar, according to Kazakhstan’s Central Bank.

“The Kazakh tenge currency rate is formed under the influence of many financial and trade markets, including the influence of the demand for US dollars in local Kazakh markets, but mostly, it is influenced by the rapid decline of the oil prices worldwide. In December 2015 alone, Brent prices dropped from US $44.4 to US $37.8 per barrel, and this has affected currency devaluation,” says the Central Bank’s statement.

Kazakh economist Timur Isayev says that these arguments are not convincing enough.

“The Kazakh tenge has, in the past two years, since January 2014, depreciated in value by 125%, from 185 tenge to 349 tenge per 1 US dollar. Now let’s look at other oil-dependent economies. In Brazil the currency fell by 65%, in Norway by 43%, in Angola by 40%, in Azerbaijan by 33%, in Mexico by 31%, in Canada by 30%, Nigeria by 24%, in Iran by 20%. While the currency did drop significantly in all those countries, it was not as dramatic,” he says.

He adds that Kazakhstan’s currency devaluation could be compared to the devaluation of the Russian ruble, and is most probably connected to it, as the economies of the two countries are inextricably linked.

Advisor to the former head of the National Bank Olzhas Hudiberdyev says that the Kazakh tenge currency devaluation is not just a financial issue, but also a political one.

“If the oil prices rise, of course this will positively affect Kazakhstan’s economy, but this isn’t the only aspect that should be taken into consideration,” he says.

He argues that the country’s leadership has to develop new financial policies and ensure the development of other sectors of the economy.

Hudiberdyev also mentions that currently, Kazakh politicians are simply blaming one another for the currency devaluation and misguided financial policies instead of actually attempting to address the problem.

Financial analyst Daniyar Partaev says that Kazakhstan won’t be able to raise the value of the tenge, and that it will continue to fall, unless the country starts developing financial and economic policies that do not limit the country to the Eurasia Economic Union and financial operations with Russia.

“At the time of joining this organization, we were all rather worried about Russia’s political influence, but now it’s the financial side and Russia’s financial instability that we should be worried about if we want to improve our national currency rate,” he says.