Kazakhstan's central bank has devalued the national currency, the tenge, by 19 percent, due to what it describes as market volatility.
The slide halted currency-exchange points' dollar and euro trading and shuttered many shops across the country, where many retailers pay hard currency for goods abroad.
In a statement, the bank said it would ease its support for the tenge, which has fallen sharply in the past 24 hours, and limit its interventions in the domestic currency market.
It added that the gradual decrease of the U.S. Federal Reserve's stimulus program had led to a capital outflow from emerging economies to developed ones, putting pressure on emerging-market currencies.
"The National Bank of the Republic of Kazakhstan has made a decision today to stop, as of February 11, supporting the previous rate of the tenge, which yesterday, as you all remember, was 155.6 tenges [for $1]," Qairat Kelimbetov, the chairman of the National Bank of Kazakhstan, said on Khabar TV. "In connection with this, we consider the proper rate of the tenge is the new exchange rate level -- which is about 185 tenges for $1. I would like to repeat it again -- 185 tenges for $1."
Kelimbetov told journalists that he believes the bank can stabilize the rate at 185 tenges for $1.
He also said the devaluation was necessary for the country's industrial facilities to maintain their operations, adding that everything will be done to keep the annual inflation rate at the 6-8 percent level.
In a recent public statement, Kelimbetov had called on citizens to keep their savings in tenges.
Alex Nice, a Central Asia expert at the Economist Intelligence Unit in London, in an interview with RFE/RL outlined the expected impact from the devaluation of the currency.
"Consumer goods are to a large extent imported from abroad and the prices for all of those are going to shoot up markedly, which is going to push up inflation," he said. "Now, in the longer term, as Kazakhstan tries to diversify its economy, a weaker tenge will help domestic producers and perhaps encourage consumers in some areas to buy local produce. But that is a long-term project and in the short term we are going to see a spike in inflation and this is a real problem and I think it is going to cause quite a lot of anger amongst average Kazakh consumers."
Meanwhile, the abrupt plunge in value of the national currency has led to the closure of many stores and shops across the country. Kazakh marketplaces and stores sell mainly imported goods bought for hard currency abroad.
Leading car dealers in Kazakhstan -- such as Merkur Avto, AllurAuto, and Bipek Avto -- announced on February 11 that they have suspended operations until the tenge's official rate is stabilized.
RFE/RL correspondents in Kazakhstan report that almost all currency-exchange points across Kazakhstan have either stopped selling dollars and euros or have completely closed. In Almaty, however, one of the country's leading banks, BTA, was selling $1 for 190 tenges, while Alyans Bank offered $1 for 215 tenges. Also in Almaty, one private exchange point was offering $1 for 205 tenges.
In the capital of the Almaty region, Taldy-Qorghan, it was possible to buy $1 for 220 tenges in some places. In the northwestern city of Aqtobe, some banks were offering $1 for 189 tenges.
The situation has sparked fierce reactions on the Internet and social media sites. Many say it is unlikely that their salaries will be recalculated by taking the new rate into account, while prices in stores and marketplaces will no doubt rise dramatically, since Kazakhstan mainly imports its goods from abroad.
Kazakh Prime Minister Serik Akhmetov on February 11 urged the government and the National Bank to take "prompt" and "urgent" steps to keep prices from soaring, especially on staples, and to prevent a "frenzy."
Some labor migrants from Kyrgyzstan, Uzbekistan, and Tajikistan are concerned, as well. Thousands of labor migrants in Kazakhstan are paid in tenge, which they usually exchange for dollars, sending the hard currency back to their families in their home countries.
The last abrupt devaluation of the tenge was in 2009, when Kazakhstan’s central bank decreased its value from 117-123 tenges for $1 to 150 tenges for $1.
With reporting by KazTAG, Kazinform, Reuters, Bloomberg, AFP, and Interfax