The tenge lost more than a quarter of its value on Thursday as Kazakhstan fired the latest salvo in an emerging market currency war, ditching a trading band stretched to breaking point by sharp falls in crude and commodities prices.
President Nursultan Nazarbayev said oil-dependent Kazakhstan, which has lost competitiveness to trading rivals during a wave of devaluations and depreciations in the region, had been forced to act.
"No one could have stood aloof from this (currency) storm," he told a meeting of officials and business leaders broadcast on state television, adding that the central bank had spent $28 billion since the start of 2014 defending the tenge.
Prime Minister Karim Masimov said earlier that Kazakhstan would now compete better, "including on the markets of our neighbours," referring to Russia and China, which sent shockwaves through emerging markets last week by devaluing the yuan.
The float was welcomed by Kazakh oil and mining sector firms.
But analysts warned it might prompt similar action by others in the region, and it dismayed ordinary Kazakhstanis, who have already seen the tenge devalued three times since 1999.
"I am going to a bazaar right now, and the tenge in my wallet are weighing less and less," translator Alexei Chernoussov wrote on his Facebook page. "I don't know if I will buy something before this cash simply evaporates."
Nazarbayev, a strongman who has ruled Kazakhstan virtually unopposed since 1989, said police would crack down on any "provocateurs" who protested against the new policy.
The official tenge rate tumbled by 26.2 percent to 255.26 per dollar on Thursday and exchange offices in the financial capital Almaty said they were selling dollars at 253.
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