Kazakhstan's tenge has become the best-performing currency in Europe and Asia this year, gaining 9.7 per cent against the US dollar in 2026. International investors have piled into the Central Asian nation's domestic debt, with foreign holdings of tenge-denominated government bonds rising to $5bn — just under a tenth of the total — as of June, up from about $2bn a year ago.

Double-digit interest rates have driven the inflows. The central bank cut its base rate to 16.75 per cent in July, the second reduction from a peak of 18 per cent, after annual inflation fell to about 10 per cent in June. Plans to connect domestic bonds to Euroclear in April accelerated inflows, making securities easier to trade. "The most active inflows have been in recent months," said Dmitry Dolgin, chief economist for Russia and CIS at ING.

The tenge's rise comes despite Ukrainian drone attacks that disrupted oil exports through a Russian Black Sea terminal in July. Analysts say the currency's strength "is mostly related to capital flows rather than trade flows." Kazakhstan's investment-grade rating and status as an alternative to Russian energy assets have also attracted capital. The country is targeting inclusion in JPMorgan's GBI-EM benchmark.

Foreign direct investment rebounded to $6.3bn in the first quarter. In August, Kazakhstan signed a $10bn deal with Nvidia and Firebird to build data centres. As a landlocked nation between China and Russia, Kazakhstan is courting Western capital to diversify its economic ties, with the US seeking a foothold to counter Chinese influence in the region.