Content

Introduction
1 THEORETICAL FRAMEWORK 5
1.1 Exchange rate and volatility 5
1.2 Financial Stability of a Company 6
1.3 Mechanisms of Exchange Rate Impact 7
2 EXCHANGE RATE DYNAMICS IN KAZAKHSTAN (2010–2025) 9
2.1 USD/KZT Dynamics (2010–2025) 9
2.2 Calculation of Exchange Rate Volatility (2015–2025) 10
3 EMPIRICAL ANALYSIS OF SELECTED COMPANIES 12
3.1 Selection of Companies 12
3.2 Profit Analysis 12
3.3 Foreign Currency Debt Analysis 13
3.4 Relationship Analysis 14
4 COMPARATIVE ANALYSIS 16
4.1 Average Indicators by Group 16
4.2 Interpretation of Differences 16
5 RISK MANAGEMENT RECOMMENDATIONS 18
5.1 Currency Risk Definition 18
5.2 Risk Management Strategies 18
Conclusion 21
References 23

Introduction

Relevance of the topic. The exchange rate of the national currency strongly influences the economic environment in Kazakhstan. It determines the cost of imported goods, affects inflation, and shapes business planning decisions. Since 2015, Kazakhstan has operated under a floating exchange rate regime, where the USD/KZT rate is mainly formed by market forces rather than strict government control. This shift significantly increased exposure to external shocks. The tenge began reacting more sharply to global oil price movements, capital flows, and geopolitical instability.

Over the past decade, several periods of depreciation have demonstrated how sensitive the national currency is to international conditions. For example, following the transition to a floating regime in 2015, the tenge experienced a sharp adjustment. Later, during the COVID-19 crisis in 2020 and the geopolitical turbulence of 2022, the exchange rate again showed noticeable volatility. These changes were not isolated events. They reflected structural characteristics of Kazakhstan’s economy, which remains highly dependent on commodity exports and imports of finished goods. Oil revenues, in particular, play a decisive role in foreign currency supply, which directly affects USD/KZT dynamics.

It is important to recognize that exchange rate volatility is not just a macroeconomic indicator reported in financial news. It directly affects companies. When the tenge weakens, the cost of imported equipment, raw materials, and consumer goods rises. At the same time, companies with revenues in foreign currency may experience higher income when converted into tenge. These opposite effects create a complex financial environment. This complexity is not always obvious at first glance, yet it shapes real business outcomes.
Moreover, foreign currency borrowing adds another layer of vulnerability. If a company has loans denominated in US dollars, depreciation increases the size of its obligations in local currency terms. This means that even stable firms can face unexpected financial pressure. In such conditions, currency volatility becomes a key factor influencing corporate stability. Understanding this mechanism is therefore essential.

Research Problem. The core issue examined in this study is the instability of the USD/KZT exchange rate and its influence on corporate financial stability. In recent years, fluctuations in the exchange rate have often been driven by external factors such as oil price changes and capital movement between emerging markets. These fluctuations sometimes occur rapidly. When the exchange rate shifts sharply within a short period, businesses must react immediately.
Import-dependent companies face higher costs when the tenge depreciates. They must either increase prices or reduce profit margins. Export-oriented firms may temporarily benefit from a weaker tenge, yet they also operate in volatile global markets. In addition, many companies combine both import and export activities, which makes the overall effect difficult to predict. This raises an important question: does currency volatility weaken financial stability in all cases, or does its impact depend on the company’s structure?

The situation becomes even more complicated when foreign currency debt is considered. If a firm earns revenue mainly in tenge but services loans in US dollars, depreciation increases financial risk. Liquidity pressure may arise. Investment plans may be postponed. Financial stability, therefore, depends not only on profitability but also on debt composition and cash flow structure. These interactions require careful analysis.

Without empirical examination, discussions about currency risk remain theoretical. Data are needed to identify patterns. It is necessary to compare different types of firms and evaluate how exchange rate changes affect their financial indicators. Only then can the real scale of currency risk be understood.

Objective. The main objective of this research is to analyze how volatility in the USD/KZT exchange rate influences the financial stability of companies operating in Kazakhstan.

Research Tasks

• First, the study analyzes the historical dynamics of the USD/KZT exchange rate and identifies periods of significant fluctuation.
• Second, exchange rate volatility is measured using statistical tools in order to quantify instability rather than describe it qualitatively.
• Third, financial indicators of selected companies are examined to evaluate profitability, liquidity, and debt structure.
• Fourth, export-oriented and import-dependent firms are compared to determine whether their responses to currency movements differ.
• Fifth, the relationship between exchange rate changes and profitability indicators is assessed through graphical and numerical analysis.
• Sixth, analytical tables and visual representations are constructed to illustrate observed trends clearly.
• Finally, the study evaluates how currency volatility interacts with foreign currency debt and overall financial stability.

Research Hypotheses

H1: An increase in the USD/KZT exchange rate negatively affects the financial stability of import-dependent companies.
H2: Export-oriented companies are less vulnerable to depreciation of the tenge due to foreign currency revenues.
H3: A higher share of foreign currency debt increases financial risk when the USD/KZT exchange rate rises.
H4: Sharp and sudden volatility has a stronger negative impact on financial stability than gradual depreciation of the national currency.

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