Kazakhstan Has Raised Interest Rates on Foreign Currency Deposits: Why, and Where Should You Invest Now?

The Kazakhstan Deposit Insurance Fund (KDIF) announced that, effective October 1, 2026, it will raise the maximum interest rate on foreign-currency deposits with a term of 12 months or more from 1% to 2.5% per annum. This limit had been in place since March 2020 and was justified by the need to “align foreign currency deposit rates with global rates” following the U.S. Federal Reserve’s key rate cut.

This time, the decision came shortly after the Fed raised its interest rate on September 16. A few days later, Aliya Moldabekova, deputy chair of the National Bank, announced that a phased liberalization of the terms for foreign currency deposits would begin in October. She attributed this decision to the macroeconomic situation, specifically the decline in the share of dollar-denominated deposits in the economy as a whole.

According to the National Bank, from March 2020 to August 2026, the overall share of foreign currency deposits fell from 46.7% to 18.3%, including a drop among retail deposits from 47% to a record low of 15.4%, and from 46.5% to 22.1% among corporate accounts.

In Kazakhstan, banks pay quarterly contributions to the Deposit Insurance Fund—ranging from 0.07% to 0.36% of the total amount of deposits. However, if a bank exceeds the established maximum rates, it is subject to a higher rate.

Kazakhstan currently has some of the lowest interest rates on dollar-denominated deposits in the region. Specifically, in Georgia, according to the local National Bank, the maximum interest rate on one-year dollar deposits is 4%. In Armenia, dollar interest rates reach 5.25%; in Kyrgyzstan, 6%; and in Uzbekistan, they go as high as 9%.

Analysts attribute the regulator's decision to the strong tenge: since the fall of 2025, its exchange rate against the dollar has appreciated by 19.8%. However, they do not expect this move to bring about any radical changes.

Danyar Orazbaev, an analyst at Freedom Broker, believes that 2.5% does not seem like a compelling argument for depositors. He points out that current interest rates on tenge deposits are at least 15%. Meanwhile, in the securities market—where many investors have shifted their funds due to the low interest rates on foreign currency deposits—risk-free yields are also rising and have already reached 5% on U.S. Treasury securities.

Orazbaev points out that foreign currency deposits are subject to a minimum reserve requirement of 15 percent, compared to 5 percent for tenge. In other words, for the same amount of funds raised, a bank must hold three times as many dollars as tenge in reserves at 0% per annum, which increases the effective funding rate. “In our assessment, overall, the effect on the dollar exchange rate will certainly not be immediate. But even the long-term effect, all other things being equal, is minimal due to the small size of the rate,” he concludes.

Zaman Gabibov, an investment analyst at ATLAS Capital, agrees that this decision will have only a limited impact on the tenge exchange rate, and that exchange rate movements will continue to depend on macroeconomic and external factors. However, he believes that “in relative terms, the increase in the ceiling rate from 1% to 2.5% appears significant and may make long-term foreign currency savings more attractive to depositors who are primarily focused on currency diversification. At the same time, absolute returns remain moderate, and the final terms will be determined by the banks themselves.”

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