AKIPRESS.COM - Kazakhstan’s central bank set its new base interest rate at 12 percent as it develops policy tools after abandoning a currency peg last month, reports Bloomberg.

The overnight repo rate was designated as the new benchmark, the National Bank of Kazakhstan in Almaty said on its website on Wednesday. It will also offer an unlimited lending facility to banks at five percentage points above the main rate and accept deposits at five percentage points below its level, according to a statement.

Central Asia’s biggest energy producer cut its currency loose on Aug. 20, triggering a 22 percent slide in the tenge to a record low versus the dollar. The move followed neighboring China’s shock devaluation of the yuan on Aug. 11, which drove down oil prices on concern global economic growth will stumble.

“The high rate levels are clearly seen as securing the banking system from deposit outflows and anchoring inflation expectations.” Dmitry Polevoy, a Moscow-based economist at ING Groep NV in Moscow, said by e-mail. “The effectiveness of the new policy is highly conditional on the liquidity position of banks versus National Bank of Kazakhstan.”

Before the announcement, the repo interest rate fell 116 basis points to 12.5 percent and the cost for one-day dollar-tenge currency swaps dropped 36 basis points to 13.59 percent on the Kazakhstan stock exchange, according to the bourse. The tenge weakened 0.4 percent to 240.53 against the dollar as of 5:07 p.m. in Almaty, before the announcement, according to data compiled by Bloomberg.