According to Dossaev, in February 2020, inflation amounted to 0.6%. In annual terms, it increased to 6%.

“The main trend was the expected slowdown in food prices to 8.6%. Acceleration of inflation occurred as a result of a rise in the price of non-food products and paid services by 5.4% and 3.2%, respectively,” said the chair of the National Bank.

Throughout most of February 2020, the tenge strengthened amid the influx of foreign currency, the sale of foreign exchange earnings by exporters and the conversion of foreign currency assets of the National Fund for a guaranteed transfer to the budget.

On Feb. 24, the situation changed dramatically against the background of the increasing influence of the spread of coronavirus on the world economy.

“On March 6, the participants in the OPEC + meeting did not agree on the terms of the deal to reduce oil production. Russia did not support the proposal to reduce production. Against this background, Saudi Arabia on March 8, 2020, announced a decision to lower its oil prices for all regions of the world and its readiness to increase oil production from the current 9.7 to 12 million barrels per day,” said Erbolat Dossaev.

This has led to a significant decline in global oil prices. On March 9, 2011, Brent crude oil was traded between $31-36.5 per barrel on world markets, a decrease of more than 30% compared with the previous day.

The weakening of the ruble in the offshore markets on March 9, 2020, in peak values amounted to about 10% to 75.4 rubles per US dollar amid a collapse in oil prices.

At the opening of trading on March 9, the S & P500 index decreased by 7%, after which the trading was temporarily suspended.

“The price war on the global energy market is exacerbating the prospects for the development of the global economy, which is already under pressure due to the spread of the coronavirus. The Organization for Economic Cooperation and Development predicts a decline in global GDP growth in 2020 down to 1.5% if the negative impact drags on,” said the chair of the National Bank.

He also emphasized that under these conditions, the risk of a decrease in demand for Kazakhstan's exports increases, which, against the backdrop of falling world commodity prices, will lead to a further deterioration in the current account of the balance of payments in 2020, which at the end of 2019 had a deficit of $5.5 billion. This may put pressure on the tenge exchange rate and acceleration of inflation.

On the instructions of the Head of State on March 9, 2020, a joint appeal was made by the Government and the National Bank on the situation on the world oil market and measures to ensure macroeconomic stability.

“Against the background of increased risks from the external sector, it is necessary to maintain price stability, as well as protect the tenge exchange rate. Therefore, within the framework of its mandate, the National Bank at an extraordinary meeting decided from March 10, 2020, to increase the base rate to 12% with an interest rate band of +/- 1.5 percentage points. An increase in the base rate will create conditions for maintaining macroeconomic and financial stability, preventing the negative impact of external markets on domestic prices and the level of dollarization,” Dossaev said.

The National Bank confirms its adherence to the free floating tenge exchange rate regime. Nevertheless, under the changed conditions, currency interventions are not ruled out to ensure the stability of the financial system.

“The National Bank is closely monitoring the development of the situation in the global economy and international markets and is ready, if necessary, to take additional measures to ensure stability in the financial market of Kazakhstan,” Dossaev said.