BAKU, Azerbaijan, March 10
By Nargiz Sadikhova - Trend:
Any secondary effects of economic sanctions against Russia on Kazakhstan will be manageable, the S&P Global Ratings told Trend.
The agency said is does not currently expect its ratings on Kazakhstan to be affected by the Russian military intervention against Ukraine.
“However, there are contagion risks, which in the first instance are being transmitted to Kazakhstan via the correlation between the KZT and the Russian ruble (RUB). The KZT has tumbled almost 15 percent from the beginning of the year to March 1, 2022. KZT trading was partially halted on Feb. 28 when the base rate was moved to 13.5 from 10.25 percent and the National Bank of Kazakhstan (NBK; the central bank) intervened,” the agency said.
The agency noted that the National Bank of Kazakhstan (NBK) remains committed to the principles of a floating exchange rate but has the right to intervene to smoothen KZT volatility.
“We currently assume any secondary effects of economic sanctions on Russia will be manageable and do not foresee a significant disruption to Kazakhstan's access to its key oil and gas export markets. The secondary hit from sanctions imposed on Russia could make it more difficult for Kazakhstan to trade with or export its oil through Russia. However, we currently do not see strong evidence to this effect,” the agency said.
The S&P added that KZT depreciated sharply, by almost 15 percent, in response to weaker sentiment from Russia's military intervention against Ukraine.
“We expect the KZT will strengthen in the second half of the year and that total depreciation will be about 8 percent over 2022,” the agency added.
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