Kazakhstan devalued tenge – what should Latvian partners expect?

Recently it became known that Kazakhstan government decided to devalue the tenge. This country is a participant of the Customs Union, so Latvian companies cooperate with it closely.

The situation with the Kazakh tenge has been commented by the heads of several important for Latvian economy enterprises. So it turned out that it is not expected the significantly affect on the profitability of Latvian Railway (“Latvijas Dzelzceļš”) by the fall of tenge. This was stated by its president Ugis Magonis. This optimistic statement explains that the cost of transport from Asia is greater influenced by RRW tariffs than the rate of Kazakhstan. While it is known that the Latvian Railway plans to continue the productive cooperation with the republic.

The same opinion is reckoned by logisticians, who are working with direction Kazakhstan-Latvia, department of trade grain Elagro Trade. Such an attitude is because of the decision to devalue the tenge due to the monetary policy of the Russian Federation. And it is intended to strengthen the position of Kazakh exporters, increase sales, which should positively affect on the activities of logistics. Grain Department of Latvia sees no threat in the depreciation of domestic currency of the partner because the share of Kazakh grain in the total share of imports in Latvia is low. In addition, Kazakhstan has long exposes the prices of their products in the world’s major currencies, so only the ratio of the euro and the dollar may somehow extent affect the business of the Latvian entrepreneurs.

If we evaluate the position of suppliers of consumer of the products from Latvia to Kazakhstan, there is too soon to take some unique solutions. It is possible that with a decrease in the purchasing power of the population of Kazakhstan, some vendors will reduce the share of imports and free niche will be taken by Latvian companies. Much depends on the competent marketing policies of the latter.