Kazakhstan's central bank says it intervened to support tenge currency

By Mariya Gordeyeva

ALMATY, July 30 (Reuters) - Kazakhstan's central bank said on Wednesday it had started foreign exchange interventions to support the tenge currency, which fell to a historical low of 550 to the U.S. dollar during the trading session.

"In conditions of extremely low liquidity in the foreign exchange market and signs of intensified speculative pressure, the National Bank of the Republic of Kazakhstan has begun carrying out currency interventions," it said.

The tenge is down 5.8% against the dollar since the start of the month, with its fall accelerating after U.S. President Donald Trump threatened to impose sanctions on Russia and countries which buy Russian oil.

Kazakhstan, which accounts for about 2% of global oil production, is a major Russian trade partner although it does not buy Russian oil and gas. Trump did not mention Kazakhstan in his statements on sanctions.

The bank said the recent weakening of the tenge did not reflect fundamental factors and indicated that it was undervalued. The Kazakh market is viewed by many investors as a proxy for Russia, where the market is off-limits due to sanctions.

"Trump's sanction rhetoric may have had an indirect impact by increasing overall tension in the forex market. These statements could have heightened external uncertainty and influenced the behavior of market participants," said Ramazan Dosov, chief analyst at Kazakhstan's Financiers Association.

Dosov stressed that the driving factors behind the tenge's fall were a decline in export revenue from lower oil prices, an increase in imports and market expectations of a weaker currency after the government lowered the exchange rate estimate used for the budget.