Master of Economics and Business Bissenova R.A.
Kyzylorda State
University Korkyt Ata, Kazakhstan
Currency Market of Kazakhstan
Currency market is a mechanism which sets out the legal and economic
relationships between consumers and sellers of currencies, allowing to make
transactions on the following basis:
• Retail trade, when the bank in the sale directly interacts with the
client;
• transaction wholesale interbank trade, where the two banks interact
with each other by means of foreign exchange broker, and as a result created
the interbank market
National currency system - a form of organization of foreign relations
of the country, determined by national legislation. It is characterized by the
following elements: national currency unit; the composition of official foreign
exchange reserves; parity and currency exchange rate formation mechanism; reversibility
conditions currencies, the presence or absence of exchange controls; the
procedure for external payments of the country; the mode of the national currency
market and the gold market, the status of national institutions governing
monetary relations of the country.
Transactions of international trade carried out between two or more
national markets, where banks are various shopping centers interact with each
other.
Currency - payment documents or liabilities denominated in a particular
national currency unit and used in international transactions. Currency will be
a foreign exchange - in the form of bank notes, treasury notes, coins in
circulation and are legal tender in the respective foreign countries.
The central bank implements the governance of the monetary system of the countr, possessingy a
monopoly on the issue of money, keeping the available cash flow and mandatory
reserves of commercial banks. The main commodity exchange market - any
financial requirement, designated in a foreign currency. At present the foreign exchange market in Kazakhstan is
only limited by transactions in foreign currencies.
Currency exchange is the exchange of one country's currency to another’s. Main foreign exchange market
participants - banks, exporters, multinational companies, financial
institutions, investors, government agencies, businesses and individuals.
Currency market participants perform the following functions: Money
transfers; Hedging; clearing; Credit.
The most simple operation - money transfers. Hedge the currency market
participants seek to protect themselves from currency exposures of potential
losses, for example, may increase the tenge against the dollar and thus
increase the dollar value of the purchased goods. In this case, it may proceed
to hedge by buying tenge. Such forward buying tenge captures the dollar value
of the goods and provides protection against changes in exchange rates.
Foreign exchange market provides clearing mechanism when making
international payments, which acts through the circulation of foreign currency
deposits stored in correspondent banks located in other financial centers.
The Banks use the following essential tools in the currency market: telegraphic
or electronic transfer of funds from demand deposits (demand deposits); the
bank bills of exchange to bearer; Commercial bills of exchange.
The exchange rate influences on
the status of the following key economic factors: The state of monetary
circulation; The rate of growth of production; The level of prices; The level
of labor productivity, etc.
Changes in exchange rate is expressed by the increase or decrease
of competitiveness of one country in
relation to another.
The main factors affecting the exchange rate: the gross national
product; exchange rate in purchasing power parity; The level of real interest
rates; inflation; The index of industrial production; Unemployment.
Exchange rate - the price of one currency expressed in the currency of
another country. Table 1 shows the classification of currencies.
Foreign exchange transactions - is real money markets traded in foreign
currencies and payment instruments drawn in foreign currency. On the territory
of the Republic of Kazakhstan foreign exchange transactions may be carried out
by both residents and non-residents through authorized banks and non-bank
financial institutions, as well as their exchange offices. Purchase, sale and
exchange of foreign currency avoiding the above-mentioned institutions are
prohibited in Kazakhstan.
Table 1 - Classification of of currencies
|
Main characteristics |
kinds of exchange |
|
currency
Status |
- national - foreign - Reserve |
|
real form |
- cash - non-cash |
|
Mutual convertibility regime |
-
Freely convertible -
Partially convertible -
Not convertible (closed) |
|
Exchange rate regimes |
-
Fixed rate via its exchange rate parity -
Floating rate -
Hard or soft currency |
Foreign exchange transactions under the Law of RK "On currency
regulation" are divided into two categories: current transactions; transactions
involving the movement of capital.
Current includes: translations for the implementation of export-import
transactions providing a deferred payment or advance payment for goods, works
and services for a period of not more than 180 days; giving and receiving
credit for a period of not more than 180 days; transfer and receipt of
dividends, interest and other income from deposits, investments, lending and
other transactions; translations of non-trade concerns, including grants,
transfers of sums of inheritance, wages, pensions, aliments, and others.
The operations involving the movement of capital include: realization of
investments; translations for the settlement of transactions providing complete
the transfer of exclusive rights to intellectual property; transfers in payment
of property rights to real estate, except for the property, which is equated to
real estate; translations for the settlement of export-import transactions
providing a deferred payment or advance payment for goods, works and services
for more than 180 days; giving and receiving credit for more than 180 days; International
transfers for transactions related to the accumulation of pension assets and
insurance contracts cumulative nature; transfer of the trust management of
currency values.
The majority of foreign exchange transactions carried out within the
trades that are differentiated into the following types:
1) depending on the term of the transaction: Urgent - Transactions
"forward"; Cash - Operation "spot"; Swap - operation
"swap"; arbitrage transactions.
2) depending on the location of the transaction: exchange; OTC (over the counter).
Express(Urgent) is the transaction, the time of conclusion and the time
of implementation which does not directly coincide. That is, the conditions and
the price of the negotiated today, and the transaction is carried out
immediately after a certain period of time in the future. Forward transaction
involves the purchase or sale of a pre-specified amount of currency at a
predetermined price after a certain period of time.
Cash - transactions from the date of that prior to the direct
implementation of runs no more than 3 working days. These include transaction
"spot."
The deal "spot" - an agreement to exchange the agreed amount
of currency at any particular rate, exercisable no later than 2 working days
from the date of its conclusion.
The deal "swap" is an exchange operation, which is a
combination of acquisition currency on a "spot" and its simultaneous
sale on "forward". If there appears neither "long" or
"short" positions, as the purchase and sale are made at the same
time.
Arbitrage transactions - are transactions in which the participants use
the difference in the exchange rates at different foreign exchange markets in
order to get profit. Arbitrage transactions are divided into currency arbitrage
in space and in the temporary, simple,complex and interest-bearing.
The control over fulfillment of foreign exchange transactions in
Kazakhstan, as well as measures for the detection, prevention and suppression
of that order is carried out by authorized state bodies - the National Bank of
Kazakhstan, the Ministry of Finance of the Republic of Kazakhstan, the Agency
of Kazakhstan on regulation and supervision of financial market and financial
organizations, foreign exchange control authorities.
Literature
1. Искаков У.М. Рузиева Э. Бохаев Д.Т. Финансовые
рынки и посредники. Алматы-Экономика ,2005.
2. Международные валютно-кредитные и финансовые
отношения: Учебник / Под ред. Л.Н.Красавиной.-Москва
3. «О Национальном банке
РК» Закон РК от 30.03.1995 г.
4. «Закон о валютном
регулировании РК» от 24.12.1996 г.