Moody's predicts a further devaluation of the tenge by 20% by the end of 2016

Almaty. July 16. Silkroadnews - Central scenario of Moody's Investors Service provides a further devaluation of the Kazakh tenge by 20% by the end of 2016, reports KazTAG.
As indicated, Moody's published a report entitled "Banks in CIS feel pinch from Russia downturn and low oil prices". In it, in particular, it is argued that the recession in Russia and the fall in world oil prices in 2015-2016 will have an impact on banks in six countries of the CIS.
Moody's predicts a decrease in Russia's GDP by 3% in 2015 and zero growth in 2016, based on the projected average price for Brent at $60 a barrel this year and $65 per barrel next year.
In the view of the rating agency, the adverse factors associated with the devaluation will most impact on banks of Belarus, Tajikistan and Azerbaijan. However, they are likely to be relatively modest in Uzbekistan, where there is a strict currency controls in which the devaluation of UZS against US dollar happens gradually. In Armenia, the negative impact will also be moderate, given the relatively low level of devaluation of the dram, but the banking sector of Armenia, characterized by a high degree of dollarization, will face increased pressure on asset quality in the event of a further depreciation of the national currency.
"The decline in remittances from CIS citizens, working in Russia, who in the 1st quarter of 2015 dropped to US $1.9 billion (a decrease of 47% compared to the same period last year), is another major risk factor for banks, mostly in low-income countries, such as Tajikistan, where remittances account for a significant share of GDP", - underlined in the text.
At the same time the reducing of the flow of regular remittances, which are a major source of income, will worsen the quality of loans to individuals as well as small and medium businesses, which depends on the sale of goods and services. Taking into account trade ties, rating agency predicts that the weakening of the Russian economy will most serious impact on the Belarusian banks. According to Moody's, a sharp drop of Belarusian exports to Russia in I quarter of 2015 is a major risk factor for the quality of the assets of the Belarusian banks.