Crude is greasing the wheels of one of the worldâ€™s best-performing exotic currencies. Kazakhstanâ€™s tenge, which has racked up the biggest advance among its thinly-traded counterparts the past six months, is poised for more gains as demand increases following the rally in the price of oil, the former Soviet republicâ€™s No. 1 export, according to BMI Research. Bank of America Merrill Lynch is also a fan, saying earlier this month that the tenge could climb 15 percent in 2017 thanks to elevated crude prices.
The tenge has strengthened more than 6 percent since mid-August, putting it well in front of its nearest competitors â€” the Lesotho loti and Swaziland lilangeni â€” when it comes to exotic-currency gains, data compiled by Bloomberg show. Following a seven-day rally, the tenge closed at 318.80 per dollar Friday, close to its strongest level since the end of 2015.
After breaking resistance at 326 per dollar in late January, there are now no clear near-term resistance levels between the tengeâ€™s spot rate and 195 per dollar, the level the currency traded at before the central bank shifted to a free float in 2015, analysts at BMI, a unit of Fitch Group Inc., wrote in a research note dated February 16. Given that oil prices probably wonâ€™t rise much in the near term, the scope for further gains in the tenge could be circumscribed, according to BMI. The analysis group forecasts crude averaging $57 a barrel in 2017 and $60 in 2018.