Neighbouring China devalued its yuan last week, causing a rout in many other emerging market currencies. Kazakhstan’s tenge plunged a record 23pc after the country relinquished control of its exchange rate, becoming the latest emerging market to abandon efforts to prop up its currency before the US raises interest rates. But since then pressure on the tenge has risen as oil prices have slipped below $50 and the rouble of its biggest trading partner Russian Federation fallen around 15 percent. Vietnam devalued its currency on Wednesday for the third time this year and widened its trading band, after a devaluation in China last week triggered the yuan’s steepest slide in two decades. The slide of the Russian ruble on the back of Ukraine-related sanctions implemented by the West and falling hydrocarbon prices has also taken its toll on Kazakhstan, resulting in cheaper Russian products flooding the domestic market. “But, of course, all attention was paid to the fact that the maximum rate offered at auction amounted to 197 tenge per $1�. Kazakhstan, Central Asia’s largest economy and No. 2 post-Soviet oil producer after Russian Federation, suffered a 40 percent fall in exports between January and July, said National Economy Minister Yerbolat Dosayev, due to the sharp drop in global oil and commodity prices. The overvalued tenge has led to a surge in Russian steel imports and forced ArcelorMittal’s local unit to make a “significant reduction� in workers salaries, Chief Executive Officer Vijay Mahadevan said August 7. ArcelorMittal said Wednesday that while it welcomed the devaluation, the tenge versus ruble exchange rate remained outside historical norms. “The current corridor was established based on oil prices in the range of $55-60 per barrel, but the price is $48 [per barrel of Brent crude oil]�, Khudaibergenov pointed out, saying that as a result, the segment of Kazakhstan’s business sector that was pushing for a sharp devaluation would get what they wished for.

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