The market overview has been prepared by analysts from the Association of Financialists of Kazakhstan (AFK).
Currency Market The balance of supply and demand in the currency market is slightly stabilizing: as a result of Wednesday's trading, the exchange rate for the USD/KZT currency pair decreased to 522.58 tenge per dollar, compared to 524.60 tenge the day before. The trading volume in dollars remains high, amounting to 214.9 million dollars (-2.4 million). The strengthening of the tenge may be supported by operations involving the sale of foreign currency from the National Fund and by the entities of the KGS, the influx of funds from non-residents into tenge assets, as well as the market players' preparations for the extended weekends (demand for tenge typically rises).
In today's session, the USD/KZT pair (10:17 ALA) is trading at 523 tenge per dollar.
Diagram 1. USD/KZT:
Source: KASE
Money Market Interest rates in the Kazakh money market are hovering near the lower boundary of the base rate corridor (TONIA – 14.73%, SWAP_1D – 9.96%), primarily due to a structural liquidity surplus in the system. It is noteworthy that the open position in the NBK operations is gradually increasing, once again approaching the record high of 7.5 trillion tenge.
Stock Market As a result of Wednesday's trading, the KASE index slightly decreased, settling at 5,546.5 points (-0.1%). Changes in the index's instruments did not exceed 0.9% against the backdrop of low trading activity (the trading volume fell by 26% to 283.3 million tenge). Market activity may decline ahead of the extended New Year holidays, which will contribute to low volatility in the index.
Oil Brent crude prices slightly rose on Wednesday – to 73.4 dollars per barrel (+0.3%). The market received support from data indicating a moderate decrease in commercial crude inventories (-0.9 million barrels) and a drop in U.S. oil production (by 27 thousand b/d – to a level of 13.6 million b/d). Additionally, Indian authorities reported an increase in oil imports in October to 25.369 million tons, which is 33.3% more than in October 2023.
Risk Assets The appetite for risk sharply deteriorated on Wednesday against the backdrop of the Federal Reserve's meeting results and the increased likelihood of a partial shutdown of the U.S. federal government. It is worth noting that the American stock market plummeted by 2.6-3.6% on Wednesday. The Fed unexpectedly lowered the interest rate by 25 basis points to 4.25-4.5% per annum. However, the central bank revised its forecast for rate cuts in 2025 to two reductions of 25 basis points instead of the previously expected four. This evidently had a strong negative impact on market sentiment. The situation worsened with Donald Trump's call for Republican lawmakers to reject the bipartisan temporary funding bill for the government, which must be passed by Friday. This significantly increases the likelihood of a partial shutdown of government agencies as early as Saturday. Recall that the previous "shutdown" occurred in December 2018 during Donald Trump's first presidential term (lasting a record 34 days).
Safe-Haven Assets Against the backdrop of the double reduction in the projected decrease of the interest rate in 2025 and the risk of a partial shutdown of the U.S. federal government, the dollar index surged sharply from 107 to 108.1 points, while the yield on 10-year government bonds increased from 4.39% to 4.52%.