April 15, 2019 / 11:33 AM / 5 months ago

UPDATE 2-Kazakh central bank trims policy rate after president orders cut

(Adds comments on currency interventions, reserves)

ALMATY, April 15 (Reuters) - Kazakhstan’s central bank cut its policy rate by 25 basis points to 9.00 percent on Monday, in an expected move taken after the country’s President, Kassym-Jomart Tokayev, ordered it to make credit more affordable.

In a poll taken mostly before the president’s comments, market players had expected the central bank, which is nominally independent in its monetary policy decisions, to leave the rate unchanged.

It cited slowing inflation and positive external factors as the reasons for the cut, which comes weeks before a snap presidential election.

Kazakhstan’s annual consumer price inflation stood at 4.8 percent in March, the same level as in February and down from 5.2 percent in January.

Further monetary policy decisions would depend on how actual inflation corresponded to forecasts for 2019-2020, the bank said in a statement, adding that its data showed economic observers expected inflation to slow further over the next 12 months.

Some analysts has cited pressure on the exchange rate of the tenge currency as one of the reasons why they expected no rate change.

Central bank data showed this Kazakhstan’s net foreign reserves dropped more than $2 billion, or 7.3 percent, in March, the biggest monthly decline since June 2013.

Central bank governor Yerbolat Dosayev told a briefing its interventions in support of the tenge amounted to just $304 million, sold from the rainy-day National Fund on March 20 following the abrupt resignation of veteran leader Nursultan Nazarbayev.

Dosayev said the central bank bought back an equivalent amount of foreign currency later in March when the market calmed down.

The drop in reserves, he said, was due to one-off foreign currency sales to KazAgro, a state-owned agricultural holding company which in March refinanced $962 million and 420 million euros in Eurobonds through domestic bonds. (Reporting by Mariya Gordeyeva Writing by Olzhas Auyezov Editing by Maria Kiselyova and John Stonestreet)

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