The decline in the income of Kazakhstan's citizens has reached a critical point. Economic analyst John Sindry emphasizes that last year, investors focused on quick returns began actively investing in securities of emerging and frontier economies, including Kazakhstan.
According to the expert, the influx of "hot money" through carry trade could become a destabilizing factor for the economy.
Investments in Kazakhstan's debt securities issued in tenge promise a yield of 16% against an expected inflation rate of 11%. This makes them more attractive compared to dollar-denominated bonds. Nevertheless, such investments are associated with risks related to currency fluctuations and changes in the country's monetary policy — which is characteristic of carry trade.
Among the countries whose bonds became interesting for carry traders in 2025 are those that recently declared default (such as Zambia and Ghana) and those that had to seek assistance from the IMF (Egypt and Pakistan). However, over the past decade, the debt market of frontier economies in national currencies has tripled, reaching one trillion dollars. In 2025, these assets became some of the least volatile, as the economies of developing countries dependent on imports cannot afford sharp currency fluctuations and conduct more active currency interventions.
The expert points out that Ghana and Kazakhstan, which traditionally issued bonds in dollars and euros, have begun attracting "hot money" to smaller domestic markets.
The influx of foreign investors could lead to a sharp strengthening of the tenge, as happened at the end of 2025 after the increase in the base rate. However, one should not relax. "Hot money" can leave the market as quickly as it arrived. The analyst emphasizes that Kazakhstan, along with Pakistan and Serbia, is increasing its gold reserves as a precautionary measure.
Significant foreign investments in short-term bonds of the national currency can create a false sense of stability. In the event of a mass exit of investors from the market, this could exacerbate the crisis when they attempt to exit through narrow "doors," notes John Sindry.
Earlier, analysts warned that the sharp rise in the tenge exchange rate at the end of 2025 could be temporary. If foreign investors decide to sell Kazakhstan's securities en masse, it could lead to an immediate drop in the exchange rate.
