Bank of America estimates the Kazakh tenge is about 1-1.5% overvalued even as the currency currently benefits from elevated oil prices, seasonal inflows and a tighter mix of monetary and fiscal policy. The bank says these support factors could keep the tenge firm in the near term but cautioned that such backing is likely to diminish as seasonal patterns shift.
According to the bank, the timing for a potential reversal is within the next two to three months. That window is particularly sensitive to a broader change in sentiment toward emerging-market currencies - if those currencies come under renewed pressure, the tenge s temporary strength may evaporate more quickly.
Bank of America also reaffirmed that it had highlighted the tenge's favorable stance in a prior report dated April 7, 2026. Looking beyond the immediate seasonal cycle, the bank described the longer-run outlook for the tenge as constructive. Factors cited include a normalization of growth and inflation, the anticipated end of structural tenge liquidity inflows arising from the National Oil Fund and from central bank gold purchases, and the prospect of healthy inflows into local financial markets.
On interest rates, Bank of America projects the first policy rate cut to occur on July 24. The bank noted that the typical entry point for executing a receiver or a long bonds position tends to come about two months ahead of that initial cut. Given that pattern, the bank suggested the summer could bring some downward pressure on the tenge because of negative seasonal effects, and that waiting until seasonality eases may be a preferable approach - unless overall emerging-market risk conditions are robust enough to support the currency.
Turning to fixed income, Bank of America observed that liquidity in Kazakhstan's bond market has been improving but remains challenging. For that reason, the bank advised maintaining a bond trade for a six-month horizon to give it sufficient time to outperform a non-deliverable forward trade, reflecting the need to weather limited liquidity while capturing expected moves.
Context and market implications
- The tenge's short-term firmness is influenced by energy sector dynamics and domestic policy tightening.
- Over the medium term, structural changes in liquidity sources and anticipated inflows to local markets underpin a constructive view.
- Bond market liquidity constraints affect recommended trade duration for fixed-income positions.