Kazakhstan macro: The tenge remains strong as the current account turns positive and capital flows in
S&P Global Ratings recently upgraded Kazakhstan’s sovereign credit ratings to BBB from BBB- (long-term) and A-2 from A-3 (short-term), recognizing the government’s fiscal reforms and greater resilience to external shocks. The agency noted GDP growth could reach about 5.1% this year — well above its previous expectations — before moderating to around 4.0% to 4.5% in the medium term. Stronger fiscal discipline, easing inflation, and expected base rate cuts may help keep government debt near 22% of GDP. The agency also highlighted ongoing economic diversification, although the country still heavily relies on hydrocarbon exports.
These views align with our own expectations for GDP growth of roughly 5.0% this year, despite a slow start in early 2026 from reduced oil output and exports due to CPC damage. This short report gives an update on the exchange rate and possible risks if oil prices settle in a lower range and capital inflows slow down. While various forms of government intervention remain, their impact on the Kazakh markets has diminished as macroeconomic policy has become less interventionist, while the economy is doing well.
The connection between oil prices and the USD/KZT exchange rate remains strong. If oil prices fall and FDI inflows slow, it’s likely the USD/KZT could return to previous levels. This is especially true if export revenues drop for any reason and stay low for an extended period, as the portion left after covering importers’ FX needs and investors repatriating profits could shrink significantly, potentially pushing the USD/KZT toward a new equilibrium.
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