The Kazakh tenge hit KZT343.21 against the greenback, its lowest level in 11 months, during October 4 trading on Kazakhstan’s stock exchange. The rate, recorded at 15:00 Astana time, was down from the previous trading day’s closing price of KZT341.24.

The central bank attributes the tenge’s weakness to speculative trades. The losing streak prompted the regulator to intervene in August and September by selling foreign currency on the domesic market, but it insists that the sales, which were relatively small, were aimed only at smoothing out exchange rate volatility rather than supporting the currency. The central bank reported that it was a $70mn net seller of foreign currency in August but as yet has not given a figure for September.

The continued strain on the tenge comes despite Kazakh central bank chairman Daniyar Akishev’s statement earlier in September that the tenge may strengthen thanks to growing energy prices that would boost the oil-exporting nation. The statement was largely aimed at discouraging foreign currency retail buyers who doubled dollar purchases in August. But oil prices have come under renewed pressure in the past several days, falling from above $52 per barrel on September 27 to $50.42 per barrel on October 3.

Moreover, the tenge has closely tracked the Russian ruble since early 2016 following Kazakhstan's switch to a floating exchange rate in 2015. Russia is Kazakhstan's main trading partner. Both the Russian ruble and the tenge have been hit by low oil prices - with oil the key export for both Russia and Kazakhstan - as well as by continued and reinforced US sanctions against Moscow. Yet the tenge has also been weakening against the ruble, hitting a 19-year low this month - it stands at KZT5.9 to the ruble.

Following the currency regime change in 2015, the central bank hiked its policy rate to 17% to stabilise the tenge and it has been gradually cutting rates in line with the recovery of the currency.

Kazakhstan’s central bank cut its key policy rate by 25 basis points to 10.25% on August 21. The bank attributed the decision to expectations of declining inflation, but noted that uncertain and volatile external conditions decreased the likelihood of further cuts later this year. The external conditions referred to are likely the recently strengthened sanctions drawn up by the US Congress against Russia.

To encourage investors to buy tenge, the central bank has been selling short-term tenge debt at high interest rates, but yields on the debt have declined along with interest rates. In August alone, investors placed around $1.2bn in tenge equivalent in other debt instruments.

The central bank has previously noted that it "reserves the right to intervene in the event of sharp and destabilising exchange rate movements", but remains committed to the free floating exchange rate.