Kazakhstan’s tenge had appreciated 8.89% against the dollar since the start of 2026 (as of August 26), extending a rise that has made it one of the strongest-performing currencies globally this year. The price of oil remains the usual suspect for the strength shown by the currency due to Kazakhstan’s economic reliance on oil exports and the resultant FX earnings, though there are analysts who beg to differ, telling a much more complex story.

Observers would have expected this summer’s oil export disruptions to weigh on the Kazakhstani tenge, or KZT. The Caspian Pipeline Consortium (CPC), which transports more than 80% of Kazakhstan’s oil exports, repeatedly halted loading operations in July following drone strikes on tankers traversing the Black Sea. However, the tenge continued to appreciate despite the difficulties.

It is likely that this year’s oil prices stood as a greater source of support for the currency than any damage that could have resulted from the summer disruptions. 

Forbes Kazakhstan cited financier Rasul Rysmambetov as saying that Kazakhstan’s fiscal situation and the tenge benefitted from crude prices, which  had remained above $90 a barrel, partly because of tensions around the Strait of Hormuz, the chokepoint between Iran and Oman.

The news outlet’s report also quoted Arman Baiganov, a financial adviser at R-Finance, who noted that oil had been trading at about $62 a barrel before military activity in the Persian Gulf intensified, after which prices rose by nearly 50%. It was around that time that the strength of the Kazakh currency against the greenback began to surge, reaching KZT 456 to the dollar in April, though it weakened again over the next two months, hitting nearly KZT 489 in June before reversing course in July.

The trajectory appears to clearly follow the price of crude, but many observers credit a wave of factors beyond the price of oil for propping up the tenge. 

Trade and FX supply 

Ramazan Dosov, chief analyst at the Association of Financiers of Kazakhstan (AFK), pointed to stronger external trade as another fundamental source of support. Kazakhstan’s trade surplus increased to $4.4bn in June from $1bn in May, according to his data, as exports expanded more rapidly.

“This is the highest figure in several years. At the same time, the surplus reached $8.9bn in the first half of the year, an increase of 21.5% year on year. Growth in export revenues increases the potential supply of foreign currency,” Forbes Kazakhstan reported Dosov as saying.

He added that oil prices above $90 a barrel had improved expectations among foreign-exchange market participants and could have reduced demand for hard currency.

Foreign investor appetite for tenge

Rysmambetov said the 18% benchmark interest rate introduced in Kazakhstan in October 2025, together with indications that substantial cuts were unlikely in the near term, had made tenge assets more attractive to carry-trade investors.

“Carry trade players, who bring in dollars and invest in our government securities, realised that they could invest in tenge assets without fear and bring in dollars,” Forbes quoted Rysmambetov as saying.

For overseas investors, elevated interest rates and a stronger tenge offer the prospect of returns from both local bond yields and currency appreciation. The investment flows themselves support the currency because investors must acquire tenge before buying local securities. 

In July, non-residents increased their holdings by KZT 92.2bn ($201.3mn as of August 26) to KZT2.6 trillion. Kazakh data show that foreign demand for government securities began building well before this summer. Foreign holdings of Kazakh government debt climbed from about KZT 1.1 trillion to KZT 2.6 trillion over roughly 18 months, equivalent to an increase from approximately $2.3bn to $5.5bn, The Times of Central Asia reported. 

The Financial Times reported earlier in August that non-resident holdings of tenge-denominated bonds had increased from about $2bn to $5bn over the previous year. 

The AFK has identified non-resident transactions as one source of support for the tenge alongside foreign-currency sales by exporters, state-controlled companies and the central bank.

The non-resident holdings have grown 32.9% since the start of the year, while their share of the government securities market has risen from 6.2% to 7.2%. The AFK has attributed the demand to high real interest rates and relative macroeconomic stability.

Easier market access

High yields are not the sole reason for growing international participation. Kazakhstan is also improving the infrastructure via which overseas investors can access its domestic debt market, The Times of Central Asia's report said.

A primary dealer system was launched on May 4, with five banks granted primary dealer status. They are expected to support the government securities market, including by facilitating secondary-market bond trading.

In April, the National Bank announced that Euroclear had begun work to make Kazakhstan’s government bonds eligible for settlement through its international system. A direct connection to the local market infrastructure is planned for 2027. This would allow international investors to settle Kazakh government debt through a familiar global platform alongside the existing Clearstream channel.

Kazakhstan is also seeking eventual inclusion of its tenge-denominated government bonds in JPMorgan’s GBI-EM, a major benchmark for emerging-market sovereign debt, the news outlet's report said. Inclusion could increase demand from funds that track or benchmark their portfolios against the index.

Will KZT continue to strengthen this year?

The tenge has also benefitted from a temporary increase in FX supply as Kazakhstan approaches the August quarterly tax period, Forbes Kazakhstan reported Dosov as saying. Exporters traditionally increase sales of their foreign-currency earnings before the peak of quarterly tax payments on August 25.

“Additional supply is generated through operations by the National Bank and state-owned entities. Under these conditions, foreign-currency supply has exceeded demand in recent sessions, allowing the tenge to strengthen,” Dosov said.

Dosov noted that the factors currently supporting the currency could remain in place at least through the end of the tax period. Exporters’ sales of foreign-currency earnings could decline after August 25, potentially slowing or ending the tenge’s appreciation.

Beyond the tax period, the currency’s direction will depend mainly on oil prices, exchange-rate expectations among market participants and the balance of foreign-currency flows within Kazakhstan, according to Dosov.

Baiganov similarly expects external conditions to play a major role, Forbes Kazakhstan wrote. A reduction in Middle East tensions could bring oil prices lower, creating conditions for a moderate weakening of the tenge.

The expert also identified developments involving Russia and Ukraine as a potential source of pressure. A further prolongation of military action, combined with possible disruption to Russia’s harvest and grain exports through the Black Sea, could affect food supplies and raise prices for Russian goods. That could add to inflationary pressure in Kazakhstan and increase the risk of a weaker tenge.

In addition, the attractiveness of Kazakh securities for foreign investors remains dependent on conditions that may not last.

The National Bank reduced the key rate from 18% in the spring to 17% in June and 16.75% in July. It has not committed to a predetermined path for future decisions and says policy may change depending on inflation. Its next rate decision is scheduled for September 4.

Lower yields would reduce part of the current advantage of Kazakh bonds. 

Projections for September, October, November

The tenge’s stronger-than-expected performance prompted American non-profit organisation, National Bureau of Economic Research (NBER), to revise its exchange-rate projections, according to an analytical article by the bureau published on EconomyKZ.org. The average USD-KZT rate fell from KZT 487.9 in June to KZT 471.7 in July – the bureau had previously forecast a July average of KZT476.7

“By comparison, the actual rate was 12.5 tenge, or 2.7%, above the optimistic scenario of 459.2, and 22.4 tenge, or 4.5%, below the pessimistic scenario of 494.1," NBER wrote. "Once again, the actual trajectory was closest to the baseline [scenario of 476.7] rather than either extreme scenario, which the Bureau sees as further evidence that the model is sound.”

The bureau’s revised baseline puts the August average at KZT 470.5 per dollar, before forecasting a depreciation to KZT 486 in September and KZT 499.7 in October. It then expects the currency to recover modestly to KZT 496.6 in November and KZT 494.2 in December. Under the “optimistic scenario”, the exchange rate is expected at KZT 453.1 in August, KZT 468.5 in September, KZT 482.3 in October, KZT 479.1 in November and KZT 476.7 in December. The “pessimistic scenario” puts them at KZT 488.0, KZT 503.4, KZT 517.2, KZT 514.0 and KZT 511.7, respectively.

The current rate of the tenge (as of August 26) appears to support the bureau’s optimistic projections. 

NBER listed global oil prices, dollar strength, exporters’ foreign-currency earnings, import payments and domestic demand for FX among the principal risks for the strength of the tenge.

Lower Brent prices combined with a stronger dollar could push the exchange rate towards the pessimistic scenario, while favourable oil-market conditions and stable foreign-currency supply could keep it closer to the baseline or optimistic outcome.