Key Moments
- Bank of America keeps a positive view on Kazakhstan’s macro backdrop and the KZT. It also highlights further appreciation potential.
- BofA’s model pegs the tenge about 4% undervalued, with a “fair value” estimate of KZT480 per U.S. dollar.
- Restrictive monetary policy, sizable daily FX interventions, and favorable seasonality are highlighted as key supports for the currency.
Valuation and Macro View on the Tenge
Bank of America reaffirmed its positive assessment of Kazakhstan’s economy and the KZT. Therefore, the currency could continue to strengthen even after recent gains.
According to BofA’s valuation framework, the tenge remains mispriced. It trades at roughly a 4% discount to its modeled value. The bank sets a “fair value” of KZT480 per U.S. dollar. Previously, it shared this constructive view in the report “Kazakhstan Viewpoint.”
Policy Support and FX Market Dynamics
One of the central supports for the tenge, according to Bank of America, is Kazakhstan’s tight monetary policy stance. The currency is also being underpinned by active foreign exchange operations conducted by the National Bank. These interventions are described as substantial, with total daily activity remaining elevated at $60-65 million per day.
| Factor | Detail |
|---|---|
| Model-implied undervaluation | Approximately 4% |
| Fair value level (USD/KZT) | KZT480 per U.S. dollar |
| FX interventions | $60-65 million per day in total |
Positioning Versus Other EM Currencies
Bank of America notes that investors hold lighter positions in the tenge. This contrasts with the Nigerian naira (NGN) and Egyptian pound (EGP). This less crowded exposure is viewed as leaving additional room for the KZT to appreciate, in contrast to currencies where positioning is already more concentrated.
Seasonality and Near-Term Prospects
Seasonal patterns are also cited as a supportive factor. The tenge has historically exhibited stronger behavior during the December through February period, while tending to underperform between July and September. Bank of America notes that this favorable seasonal backdrop could help underpin the currency in the coming weeks and may even result in the KZT moving into what it describes as “overvalued territory” for a time.




