Kazakh cbank hikes key rate by 275 bps, cites risks from oil price plunge

Kazakhstan's central bank hiked its policy rate to 12.0% from 9.25% on Tuesday, governor Yerbolat Dosayev said, citing risks of pressure on the tenge exchange rate and inflation after the collapse of oil prices.

The bank also widened its rate band to +/-150 basis points from +/-100 basis points and Dosayev told a government meeting it stood ready to intervene in the foreign exchange market and take additional measures to ensure market stability. Dosayev said the drop in the price of oil, the Central Asian nation's main export, could cause a further deterioration of Kazakhstan's current account, which posted a $5.5 billion deficit last year.

Prime Minister Askar Mamin told the same meeting he was barring state-owned companies from buying foreign currency unless it was required to meet their obligations. The tenge dropped 2.9% to 394 per dollar on the Kazakh Stock Exchange on Tuesday despite the rate hike. Trading volume surged to $320 million, the highest in 8 months.