After a volatile period at the end of the first quarter, the USD/KZT exchange rate in 2026 moved into a phase of noticeable tenge strengthening. Actual average monthly rates stood at 489.2 tenge per US dollar in February, 496.0 in March, and 488.6 in April. In May, however, the market has already shifted into the 462-465 range per dollar.
Because of this, the main question is no longer “Why did the tenge strengthen?” but rather “How sustainable is this new level once temporary domestic factors fade and the external backdrop changes?”
For a short-term outlook, it is important to separate two layers of drivers.
The first is short-term liquidity flows – taxes, regulatory requirements, and corporate sector behavior.
The second is the broader external environment, especially oil prices and the country’s overall foreign currency balance.
This second factor explains why the current strengthening of the tenge should be viewed as a market-driven move rather than an administratively managed exchange rate. When Brent oil prices remain high, the economy receives more export-related foreign currency inflows than it needs for external payments. Naturally, this lowers the price of the dollar against the tenge.
Forecast results: base scenario around 463.8 per US dollar
As of May 6, the estimated average monthly exchange rate stands at 462.8 tenge per US dollar. From this level, the following scenarios were calculated:
- Optimistic scenario: 446.3 tenge per US dollar
(absolute deviation of 16.5 tenge or 3.7%)
- Base scenario: 463.8 tenge per US dollar
(absolute deviation of 1.0 tenge or 0.2%)
- Pessimistic scenario: 481.3 tenge per US dollar
(absolute deviation of 18.4 tenge or 3.8%)
The economic meaning behind these ranges is fairly straightforward.
The base scenario assumes the tenge remains relatively strong while demand for foreign currency gradually normalizes during the summer period.
The optimistic scenario reflects a situation where foreign currency supply continues to grow through stronger export revenues and more active currency conversion, while demand for dollars stays limited.
The pessimistic scenario reflects a combination of weaker global risk sentiment and a temporary increase in corporate or import-related demand for foreign currency.
Domestic conditions in May are providing targeted support
Domestic factors in May are mostly calendar-driven.
On one hand, the tax effect from March and April has largely played out already. Companies submitted their corporate income tax declarations for 2025 by March 31, while payments were made within the following 10 calendar days. This temporarily increased demand for tenge liquidity early in the second quarter.
On the other hand, another internal support factor is expected in the second half of May. Between May 15 and May 25, tax payments for the first quarter of 2026 are expected to support the tenge again.
The market mechanism here is simple. Companies need more tenge liquidity to meet tax obligations. If they hold export revenues or foreign currency reserves, they are more likely to convert dollars into tenge. As a result, dollar supply temporarily increases in the market, reducing pressure on the national currency.
Additional support also comes from broader domestic conditions. Current monetary conditions remain favorable for tenge savings, while the regulatory environment for companies with foreign currency revenues reduces incentives to hold excessive dollar positions.
In periods like this, the tenge benefits not from a single factor, but from several forces working together in its favor.
The main driver of the current strengthening is external
The key reason behind the stronger tenge remains external.
High Brent oil prices improve the country’s foreign currency balance, boost export revenues, and create a situation where foreign currency supply exceeds demand in the domestic market.
This is why the current appreciation of the tenge should be interpreted as a result of market pricing rather than administrative intervention.
This argument will later be tested against official data. During the summer, the National Bank of Kazakhstan is expected to publish updated balance of payments statistics. Given the current oil price environment, it would be logical to expect a positive current account balance.
A positive current account means that foreign currency inflows into the economy exceed the country’s needs for imports and external payments. By basic supply and demand logic, this lowers the “price” of foreign currency in tenge terms and supports the national currency.
A correction later in May remains possible
Despite the supportive environment, one important point should be emphasized. The support coming from tax payments is temporary and calendar-related. Once the May 15-25 period passes, the domestic support factor will weaken.
At that stage, the market becomes more sensitive again to regular sources of foreign currency demand such as imports, dividend payments, debt repayments, and portfolio rebalancing.
This is why the probability of a moderate correction increases toward the end of the month. Such a move should not necessarily be viewed as a reversal of trend, but rather as a normal market reaction after a concentrated calendar-driven factor fades. It is also important to remember that scenario ranges are not guaranteed corridors. They represent statistically reasonable paths based on current market patterns and historical relationships.
Forecast methodology: stationary data and a four-model consensus
The forecast is built using an approach focused on statistical consistency and comparability over time.
- Monthly average USD/KZT data from January 2011 through the present period was used.
- The models were estimated using stationary time series data. In simple terms, the data was adjusted to remove unstable statistical behavior over time. This is critical for many econometric methods because non-stationary data can create misleading relationships and unstable estimates.
- The final forecast is based on a consensus of independent econometric models.
This consensus approach generally improves forecast stability because different models react differently to outliers, turning points, and short-term market shocks.
Forecast error statistics
The average relative forecast error for 2026 has been 0.5%, while the average absolute forecast error stood at 2.2 tenge.
In April 2026, the deviation from the optimistic scenario was:
- 1.6% in relative terms
- 7.2 tenge in absolute terms
The updated forecast for May 2026 suggests that conditions remain favorable for the tenge, mainly due to strong external fundamentals driven by high Brent oil prices. This environment continues to create excess foreign currency supply in the economy and supports the strengthening of the national currency through normal market mechanisms.
Additional support is also likely to come from first-quarter tax payments in the second half of May, as companies increase demand for tenge liquidity and step up foreign currency conversions.
At the same time, once the tax payment window passes, the domestic support factor will weaken. Because of this, the probability of a moderate correction later in the month gradually increases as regular market demand for foreign currency becomes more visible again.
This material is for analytical purposes only and is not investment advice. Exchange rates are sensitive to news, external shocks, and market behavior, so actual outcomes may differ from the scenarios.
National Bureau of Economic Research specifically for EconomyKZ.org
