Chart of U.S. dollar exchange rate to tenge, Kazakh currency

Central Asia's largest crude oil exporter, Kazakhstan, on August 20 surprised the market by announcing that it will start to free float its tenge effective immediately. The currency plunged 30% after the decision, with the tenge's exchange rate falling from 196 per dollar to 255 per dollar.

"The new economic policy of the country amid fundamental negative changes in the global economy requires the adoption of a new monetary policy to ensure a balance between the economic growth and stability of prices," Kazakh Prime Minister Karim Masimov said.

"This policy will be based on inflation targeting and transition to free floating of the exchange rate," Masimov said.

Analysts speculate that the sharp devaluation of tenge is a response not only to the falling oil price, but also to the devaluation of the currencies of Russia and China, its major trade partners.

It is also believe that the move is part of Kazakhstan’s de-dollarization strategy, which the country had vowed to implement since 2014.

In June this year, Masimov had explained the roadmap in detail during an interview, saying the process of de-dollarization may take up to 3-5 years.

He added that one of the most important goals for de-dollarization is to achieve non-cash settlement. Currently, 93% of payments made in Kazakhstan are through cash.

Meanwhile, the de-dollarization policy will further turn Renminbi into a commonly used currency in Kazakhstan. Since September last year, the Bank of China has launched direct trading of Renminbi and tenge in Kazakhstan.

in December , 2014, a currency swap agreement has been signed between the country and Central Bank.

At the same time, Sino-Kazakhstan settlements are no longer limited to boarder trade but expanded to general trade.

Both countries can freely decide the means of settlements and currency in any bilateral economic activities.