Foreign investors have increased their holdings of Kazakhstan's tenge-denominated government bonds from roughly $2bn to $5bn over the past year. By June, non-residents owned just under 10% of this market, and the strengthening of the tenge in 2026, according to analysts, is largely linked to capital inflows.
WHAT IS KNOWN
According to Financial Times, the volume of Kazakh government bonds held by foreign investors reached around $5bn by June, compared with approximately $2bn a year earlier. High interest rates were one of the key factors driving this interest.
In July, the National Bank cut its base rate to 16.75%. This was the second cut in two months following a peak of 18%. Meanwhile, annual inflation fell from around 13% in September 2025 to about 10% in June.
The head of emerging market bonds at LGT Capital Partners, Jethro Siekkinen, also noted international fund managers' desire to diversify portfolios and the fact that Kazakh bonds have become easier to buy and sell.
CAPITAL INFLOWS SUPPORTED THE TENGE
Since the start of 2026, the tenge has strengthened against the dollar by 9.7%. The publication describes it as one of the most dynamic currencies in Europe and Asia this year.
Analysts surveyed by the publication link the strengthening of the national currency primarily to capital movements, rather than just external trade and oil prices.
It is noted that the most active influx of funds occurred in recent months. Among the factors cited are rates exceeding inflation and the increased volume of information that government bodies provide to the financial market.
WHAT COULD SIMPLIFY ACCESS TO BONDS
In April, the Kazakh authorities announced plans to connect domestic government bonds to the international settlement and clearing system Euroclear. This should simplify settlement, custody and trading of Kazakh securities for large foreign investors.
Kazakhstan also hopes to have its bonds included in the JPMorgan GBI-EM index, which tracks developing countries' local-currency government debt. In addition, JPMorgan is working on a frontier emerging markets index. According to the National Bank, if Kazakhstan is included, its bonds could account for around 8% of such an index.
KAZAKHSTAN REMAINS INVESTMENT-ATTRACTIVE
Kazakh assets attract investors not only because of high rates but also because of an investment-grade credit rating, which allows institutional funds to buy the country's government debt. At the same time, interest in the tenge cannot be explained by oil alone: a significant share of production is provided by foreign companies, and part of the oil revenues is directed to external assets of the National Fund.
Despite intensified attacks in July on the infrastructure of the Russian Black Sea terminal through which a significant portion of Kazakh oil exports passes, there has been no substantial outflow of foreign funds from tenge-denominated government bonds.
FOREIGN DIRECT INVESTMENT ALSO SUPPORTED THE CURRENCY
Foreign direct investment provided additional support to the tenge. In Q1 2026, its volume reached $6.3bn.
The publication notes investor interest in developing transport routes between China and Europe. Kazakhstan is directing funds into infrastructure, part of which is financed with foreign capital. The publication also points to growing competition between China and the US for economic influence in Central Asia.
CONTEXT
Earlier it became known that Kazakhstan's government debt had increased by 2.1 trillion tenge since the start of the year, reaching 38.5 trillion tenge. The main increase came from domestic debt, while the volume of external liabilities fell over the period.
Total government and government-guaranteed debt, as well as debt under state guarantees, reached 40.9 trillion tenge.
At the same time, the Ministry of Finance stated that Kazakhstan's government debt remains at a manageable level and, according to the ministry's assessment, has no negative effects.
