Heading for the Steppe: Why Deutsche Bank Is Betting on the Tenge and the Sum

Deutsche Bank has added a position to its portfolio with a target to sell the dollar against the tenge (a short position in USD/KZT). This is stated in the investment bank’s CEEMEA Macro & Strategy Weekly note dated September 25. For the tenge, the entry rate is set at 448 tenge per dollar, with a target of 435. At the time of publication, the tenge was trading at 439.885 tenge per dollar—about 1% away from the target.

“We like the tenge, and we expect Kazakhstan to benefit from global energy prices,” the bank’s analysts write in another note—titled “Calm Before the Storm”—in the “Steppe Up” section.

The authors of the review cite the tenge’s stability as a positive factor, despite the repeal of the requirement for quasi-sovereign companies to sell foreign currency and the resumption of large-scale foreign currency purchases by the pension fund in August.

“Looking ahead, currency sales by the National Fund are likely to increase again, while we expect the Pension Fund to slow the pace of its currency purchases,” they argue, anticipating a continued inflow of foreign capital into government bonds. “Foreign investor participation remains modest, at around 8%, but it has the potential for further growth as soon as the connection to the Euroclear system becomes a reality,” the analysts write.

Although the National Bank will likely cut rates at least once more this year, the pace of easing is likely to slow. Experts note that the tenge has already strengthened significantly and, according to model estimates, appears overvalued, so the scope for further real appreciation is limited, but the tenge remains attractive for carry trades.

In its forecast table, Deutsche Bank maintained its long-term forecast for the tenge exchange rate at 490 by the end of 2026 and 540 by the end of 2027. The bank has not commented on this discrepancy; however, the trading recommendation is short-term in nature and covers a period of several months, whereas the forecast reflects a longer-term outlook.

Among the Central Asian currencies in Deutsche Bank’s portfolio, the Uzbek sum has also been included since December 2025—and its analysts still refer to it as the “preferred choice in the frontier markets.” Uzbekistan remains shielded from the war in Iran and volatility in global energy markets, analysts note. About 10% of Uzbekistan’s trade typically passes through Iranian ports; however, energy resources are imported from countries within the region, and exports of gold and fertilizers, in their view, will support the current account balance. At the same time, according to Deutsche Bank analysts, the sum has partially lost its appeal from a “carry trade” perspective.

In the fourth quarter of 2025 and throughout most of the first half of 2026, the primary balance deteriorated significantly due to the suspension of gold exports, according to the report. However, with exports likely to resume in July at a price of around $4,300 per ounce and gold reserves at a historic high of $65 billion, there is reason to expect further support for the sum exchange rate from this source. Foreign exchange inflows from remittances in the first half of 2026 also rose by 13% year-over-year to $9 billion.

Finally, the UzNIF fund’s IPO in May and the August announcement of its inclusion in the new GBI-EM emerging markets index should provide an additional boost to foreign direct and portfolio investment.

All of this is supported by ongoing reforms and privatization efforts against the backdrop of 8.5% economic growth in the first half of the year, high real interest rates of 8%, slowing inflation, and the central bank’s cautious monetary policy.

In March, shortly after the war in Iran began, Deutsche Bank first named Kazakhstan one of the “unexpected safe havens” alongside Uzbekistan. The bank’s analysts described the tenge and the Uzbek sum as “attractive currencies for preserving capital in the current unstable market situation,” although even then they considered the tenge’s exchange rate to be overvalued.

Investment banks have repeatedly pointed out the favorable situation in the region this year: in particular, just a week earlier, Bank of America called the CIS countries “almost a safe haven,” singling out Kazakhstan as the most promising market.

This article was AI-translated and verified by a human editor