Investment Activity of the Public Institutions in Foreign Financial Markets as a New Factor in the Tenge Exchange Rate

Abstract

The situation on the foreign exchange market of Kazakhstan over the past few years has been characterized by ambiguous trends and increased devaluation expectations. Problems in the field of exchange rate formation include the adequacy of the level of the tenge exchange rate, its weak predictability, as well as the loss of connection with objective factors that determined the course dynamics over a long period. The increase in uncertainty in the foreign exchange market of Kazakhstan coincided in time with the aggravation of problems in the field of public finance, in particular, with the period of progressive reduction in the volume of the National Fund, as well as the need to ensure the return on pension assets in the face of instability of the national currency. This coincidence suggests that it is the investment activity of the largest state institutions represented by the National Fund, the ENPF and the need to ensure their acceptable profitability in difficult external conditions that have become a new factor that has a serious impact on the currency market of Kazakhstan. This hypothesis is considered in the article, and for the purpose of its assessment, the relationship between the key parameters of the activity of these institutions, their profitability and the tenge exchange rate over the past few years is analyzed.