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Kazakh Leader Dismisses Central Bank Head After Tenge Tumble

President Nursultan Nazarbayev

Kazakhstan’s president criticized the performance of the central bank as he replaced Governor Kairat Kelimbetov, who devalued the national currency twice in his two-year tenure amid plummeting oil prices and a rout in emerging markets.

President Nursultan Nazarbayev named Daniyar Akishev, 39, an aide in his administration and former deputy governor at the central bank, to succeed Kelimbetov, according to a decree posted on his website Monday. The tenge weakened 0.4 percent to 281.26 versus the dollar as of 4:39 p.m. in Almaty, extending last month’s 2.9 percent decline.

Photographer: Matthew Lloyd/Bloomberg

“Trust in the national currency and the central bank is low - this can’t be allowed, ” Nazarbayev said in a statement. “There is a deficit of tenge liquidity in the country, lending is declining. Work needs to be done to fix this poor performance.”

Oil-rich nations from Venezuela to Saudi Arabia are struggling to find policy responses to the fuel’s dropping price, caused by a global production glut. Kelimbetov cut the tenge loose from its dollar peg following devaluations by Russia and China, Kazakhstan’s neighbors and its two biggest trading partners. That’s forced him to spend at least $1.7 billion, or 6 percent of reserves, to smooth swings in what became the world’s most volatile currency after it was allowed to trade freely on Aug. 20.

The central bank said Monday that it also sold $3.9 billion from the National Oil Fund to meet budget needs last month.

‘Institutional Problems’

Akishev has worked for more than 18 years at the central bank, including seven as deputy governor. He’s “fully examined economic issues and the state of affairs in our country” while working at the presidential administration, Nazarbayev said, according to the statement.

Daniyar Akishev

Photographer: Daniel Acker/Bloomberg

“Akishev’s education and experience will help him cope with this task, ” and his appointment is necessary “for the benefit of the country’s financial system, ” he said.

The tenge, already devalued by 19 percent in February 2014, weakened from about 187 against the dollar to a record low of 299.99 soon after the free float was introduced, when Kelimbetov predicted it would reach a balance within seven days. He told reporters in Almaty on Oct. 23 that the optimal exchange rate is at 250-270 versus the dollar.

“The central bank’s problems won’t be fixed by changing the head of the regulator - they are institutional problems, ” Sabit Khakimzhanov, head of research at Halyk Finance, a unit of the country’s second-largest lender, said by phone from Almaty. “They must be solved by changing and strengthening the mandate of the central bank, by making it more independent from the government.”

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