Kazakhstan intends to pull out of a deal with Russia as part of the steps to ensure currency convertibility and stability of the exchange rates of the Russian ruble and the Kazakh tenge, Azernews reported citing Trend News Agency.
The primary justification given by the administration for the condemnation is the decline in significance.
In accordance with the agreement, which was signed on January 20, 1995, in Moscow, Kazakhstan and Russia were obligated to take all necessary actions to mutually convert the tenge and ruble and to stabilize their exchange rates with respect to one another and other convertible currencies, Kursiv reports.
The National Bank and the Bank of Russia were supposed to frequently fix exchange rates between the two currencies and toward the US dollar (at least twice a week) based on the supply and demand dynamics in their respective domestic foreign exchange markets.
Additionally, the currency convertibility agreement permitted Russian and Kazakh companies to make payments in tenge and rubles, as well as in any other convertible foreign currency, if necessary. Both parties had the option of lending money to one another in tenge and rubles.
The National Bank is also recommending that similar deals with Belarus, Kyrgyzstan, and Mongolia be withdrawn. For instance, the October 27, 1992, payment arrangement with Mongolia will come to an end because it has been fully fulfilled and is no longer necessary.
The draft agreement further states that all essential steps were taken to ensure reciprocal convertibility between the tenge and the Belarussian ruble and to stabilize their exchange rates.
The supply and demand conditions in these two nations currently determine the official exchange rate for the two currencies. The same reason will be used to support February 18, 1994, financial transactions agreement between Kazakhstan and Kyrgyzstan.
