Kazakhstan Currency: Overview of the Tenge and Its Role in Finance

Kazakhstan’s national currency, the tenge (KZT), plays a key role in the country’s economy and financial system. Introduced in 1993, it has evolved in value and design, reflecting broader economic trends. As an energy-rich nation with strong trade ties to Russia, China, and Europe, Kazakhstan’s monetary policy affects both domestic stability and international transactions.

Official Status and Issuing Authority

The tenge is Kazakhstan’s sole legal tender, required for all transactions unless specified otherwise by law. Businesses, government agencies, and financial institutions must accept it for payments, taxes, and official settlements. The National Bank of Kazakhstan (NBK) controls its issuance and regulation, managing the money supply, setting interest rates, and overseeing financial institutions to maintain stability.

The NBK intervenes in currency markets to prevent excessive volatility, particularly in response to global commodity price fluctuations. Since Kazakhstan’s economy depends heavily on oil and gas exports, the central bank monitors foreign exchange reserves and inflation to stabilize the tenge.

To combat counterfeiting, the NBK updates banknotes with security features such as holograms, color-shifting ink, and watermarks, aligning with international standards to maintain public confidence.

Denominations and Daily Usage

Kazakhstan’s currency includes banknotes of 200, 500, 1,000, 2,000, 5,000, 10,000, and 20,000 tenge. Coins, known as tiyn in smaller units, come in denominations of 1, 2, 5, 10, 20, 50, and 100 tenge. Larger banknotes are used for significant purchases and savings, while smaller denominations and coins facilitate everyday expenses like public transportation, groceries, and dining.

Digital payments are increasingly common in cities like Almaty and Nur-Sultan, where contactless card payments and mobile banking apps are widely used. However, cash remains dominant in rural areas with limited banking infrastructure. To expand financial inclusion, the government promotes digital banking services so remote communities can access modern financial tools.

Retailers and financial institutions use counterfeit detection devices, and consumers are encouraged to check for security features such as raised printing, transparent windows, and ultraviolet markings.

Exchange Rate Factors

The tenge’s value fluctuates based on domestic economic conditions and external influences. Kazakhstan’s reliance on oil, uranium, and metal exports makes its currency sensitive to global price shifts. When oil prices rise, export revenues increase, strengthening the tenge. A decline in oil prices, however, can lead to depreciation as fewer dollars enter the economy.

Foreign investment also impacts exchange rates. Increased investment in Kazakh assets, such as government bonds or equities, raises demand for the tenge, supporting its value. Conversely, geopolitical instability or capital flight can weaken the currency as investors seek more stable markets. To manage these risks, the government maintains foreign exchange reserves for liquidity during volatility.

Inflation differentials between Kazakhstan and its trading partners also influence the tenge’s exchange rate. If domestic inflation rises faster than in China or the European Union, the tenge may weaken as Kazakh goods and services become more expensive relative to foreign counterparts. To counteract this, policymakers adjust interest rates to influence borrowing costs and money supply.

Role in Cross-Border Transactions

Kazakhstan’s position between Europe and Asia makes the tenge relevant for regional trade. While major international transactions often use U.S. dollars, euros, or Chinese yuan, the tenge is used in cross-border dealings within the Eurasian Economic Union (EAEU), which includes Russia, Belarus, Armenia, and Kyrgyzstan. Businesses and financial institutions in this bloc engage in currency swaps and direct conversions to facilitate trade while reducing reliance on third-party currencies.

Bilateral agreements with China have expanded the tenge’s role in trade settlements, particularly in energy exports and infrastructure projects under China’s Belt and Road Initiative. Kazakhstan also conducts local currency settlements with Russia in sectors like oil, natural gas, and transportation. These efforts align with regional trends of de-dollarization, where countries trade in native currencies to strengthen financial sovereignty.

Influence on Trade and Investments

The tenge’s stability and exchange rate dynamics affect Kazakhstan’s trade relationships and investment climate. As a resource-rich economy, Kazakhstan relies on foreign capital to develop its energy, mining, and infrastructure sectors. A stable tenge encourages long-term investment, while volatility can lead to capital outflows.

To attract investment, the government offers tax incentives, special economic zones, and policies that facilitate foreign ownership in key industries. Kazakhstan’s participation in the Eurasian Economic Union simplifies trade by reducing currency conversion costs among member states. Agreements with China and the European Union further enhance export opportunities, particularly in agriculture and manufacturing.

Efforts to diversify the economy beyond oil and gas aim to reduce dependency on commodity-driven currency movements, fostering a more resilient financial environment.