“There is no such thing as an excess of dollars”: Head of the National Bank explained the situation in the foreign exchange market

Tengrinews.kz — Timur Suleimenov, Governor of the National Bank of Kazakhstan, commented on the rising supply of dollars in the foreign exchange market. The head of the regulator also explained the impact of surging oil prices.
Why the supply of dollars has increased
Timur Suleimenov stated that the growth in currency supply is partly driven by the rising prices of oil and metals. While oil prices hovered around $60–$65 per barrel at the beginning of last year, they have now exceeded $100.
This has boosted the export revenues of oil companies, a portion of which enters the domestic market.

"There is no such thing as an oversupply of dollars. If a market economy is functioning and generating foreign exchange earnings, that currency enters the market. That is simply a fact. It is the same as saying there is an 'oversupply of square meters' in the housing market. If someone is buying them, it means someone needs them. That is the market," the National Bank Governor said.

Suleimenov added that the prices of copper and other metals have also risen by 11–14 percent.
According to him, it is more accurate to speak of an additional volume of dollars in the market rather than an oversupply.

"Overall, our exports have increased by 27 percent, which means export foreign exchange earnings have grown significantly. Consequently, more dollars are entering the market. When there is an abundance of a commodity in the market, the unit price decreases. That is exactly what is happening," he explained.

Foreign currency loans also play a role. Banks, private companies, and the quasi-public sector take out loans in dollars but finance projects in tenge. By selling foreign currency on the market for conversion, they increase the supply of dollars and drive down the exchange rate.