The bank abandoned the manat's dollar peg on Feb. 16 and began using a dollar-euro basket to manage the exchange rate after a nearly 60 percent drop in crude prices since June and Western sanctions against Russiaover its annexation of Crimea.
Azerbaijan has been less affected than other former Soviet states by Russia's economic problems but itseconomy is heavily exposed to price swings on global energy markets.
The manat was set at 1.05 to the dollar and 1.19 to the euro, down from Friday's 0.78 and 0.89 manats respectively.
"This decision was made in order to support diversification of Azerbaijan's economy, strengthen its international compatibility and export potential as well as to provide balance of payments sustainability," a central bank statement said.
The bank said it would continue to take part in the foreign exchange market and that it would target a corridor for the manat against the dual-currency basket. The manat has been pegged at just over 0.78 per dollar since mid-2011.
It has spent hugely in recent months defending the manat, eating into its foreign-currency reserves. Those fell $1 billion in January to $12.68 billion and by nearly $1.13 billion in December.
One banker in Baku said that many clients had already transferred their manat deposits into dollars.
Analysts say the South Caucasus republic's 4.4 percent economic growth target for this year is at risk because it envisages oil at $90 a barrel. Brent crude is now trading near $60 a barrel.
Oil and gas account for 95 percent of the country's exports and 75 percent of government revenues.
ANN.Az
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