Due to the frequent fluctuations in the exchange rate of the tenge and the inconveniences that they cause, many people in Kazakhstan began to call for the dedollarization of our economy.
Let’s see, and what is dollarization in general?
First of all, it seems to me, it is necessary to separate the two phenomena that we observe in our daily life. This is the binding of prices to the dollar and real calculations in dollars.
Binding prices to the dollar means that the goods are actually paid in tenge, but here the price is calculated by multiplying the conventional monetary unit (which is usually the US dollar) by the tenge rate at that moment. Formally, in this case, the legislation is not violated. But all buyers and sellers all the time look back at the exchangers and psychologically feel dependent on the dollar. This introduces instability into economic relations. Prices change, rent changes, because of this it is impossible to build long-term plans. Even the state budget cannot be properly established. In addition, prices tend to go up synchronously with the dollar exchange rate, and salaries, pensions, allowances and scholarships do not change so quickly. Therefore, at the moment of the tenge’s depreciation, those who receive incomes in it are the losers.
Of course, this is bad for the economy and for many citizens. But is the dollar to blame for this?
I’ll open one secret. In most cases, when the rate of the tenge drops, the dollar does not change. Particularly tenge falls down. In relation to most other currencies in the world, the dollar remains unchanged. Then why are we embittered at the dollar and declaring war on it? Why, because the tenge is depreciating, we want to cancel the dollar? To forget it. To pretend that it does not exist. But this is like taking offense at a thermometer for showing us heat!
Is it possible to live without foreign currencies at all?
It is possible, if our country produces absolutely everything: from bread to space satellites, from threads to computers, from toothpicks to diesel locomotives. Unfortunately, we do not produce absolutely everything. Therefore, we will have to enter the foreign market and buy there those same threads and computers for the currency. And while we import different goods from abroad, we will have to look back at the foreign exchange rate.
Now let’s consider the second phenomenon: calculations in foreign currency. This is when the goods are really given away by dollars. Under the law, settlements within the country between Kazakhstan residents in foreign currency are prohibited. But honestly, most transactions between individuals for large transactions, such as buying and selling real estate and cars, occur in cash dollars. Why? Because the seller considers the money received not only as a means of payment, but also as a means of saving. That is, he is not going to spend this money on the same day, but wants to hold them for a while. In this case, it is natural that a person chooses a more stable currency, rather than a tenge. Can it be blamed for this, blamed for nonpatriotism? I think no. In the instability of the tenge, it is not to blame.
However, in settlements in foreign currency there is another manifestation. Often people prefer to receive dollars from customers, even if they are not going to store them, but plan to spend them in the same day on various payments. I believe, it is necessary to fight with this phenomenon. Not prohibitive measures, of course, since settlements in currency are prohibited, but explanatory work. I myself once discouraged one comrade. He was selling a car and was supposed to cancel the loan on the mortgage on the same day. So he insisted that the car was paid off only in dollars. To my question: “Why?”, he could not give an intelligible answer. Referenced to the habit. But when we go out of the habit to the exchange office and buy dollars there for only one day, and then sell them, we create an unjustified turnover. That’s what I think is wrong.
That is why I welcomed the news that Kazakh and Russian partners are going to switch to mutual settlements in tenge or rubles, bypassing conversion into dollars. Why convert the tenge into dollars, and then convert it into rubles on the same day? It’s pointless! At the same time, I emphasize, I do not deny the need to bind prices to the dollar or other hard currency, but payments themselves can be made directly, without excessive conversion.
So, what conclusion do I make?
Binding prices to the dollar or other hard currency is justified by the measure of those sellers who later buy a new product in currency or are going to store this money for a while.
With actual payment, if the proceeds are spent in the near future, it makes no sense to demand payment in dollars. This will simply lead to a meaningless conversion back and forth.
And now the most important question: how do we dedollarize our economy?
Unfortunately, I must disappoint those who were waiting in this place for some fabulous and one-time recipe. The fact is that such a recipe does not exist.
I think that dedollarization is not needed. Rather, it should not be our goal. Our goal should be to fill the tenge with a real commodity content. It is necessary to produce more goods and services in the country, we need to sell our products abroad. Then the value of tenge will grow. Then we generally stop paying attention to the currency exchange and exchangers. People live in this way in Germany and France, Australia and Singapore. They do not fight the US dollar, they strengthen their currency by production and services.