The central bank used $1.13 billion from its currency holdings to support the manat in December after buying $1.27 billion in the first 11 months to keep it from strengthening, the regulator in Baku said in an e-mailed statement. The manat appreciated 0.1 percent against the dollar last month.

"As a result of the quick regulatory measures, stability was ensured fully in the currency market,” the central bank said, adding that it’s already returned to purchasing foreign currency after last month’s sales.

Contagion from the Russian ruble’s decline of more than 40 percent last year has rippled through the former Soviet Union, putting pressure on currencies from Belarus to Armenia. Azerbaijan’s central bank has vowed to keep the manat stable even as economic growth slowed to 3 percent last year from 5.8 percent in 2013 because of a slump in oil prices and production. Azerbaijan, the third-biggest crude producer among ex-Soviet republics, relies on hydrocarbons for more than 90 percent of exports and 45 percent of gross domestic product, according to the International Monetary Fund.

The central bank said the manat’s stability is key to steadying the broader economy and promised to use "all means” at its disposal to keep the currency stable through 2015. Azeri President Ilham Aliyev said last month that his country will continue to support the manat’s value for "social” reasons.

The manat gained 0.1 percent today to 0.7844 against the dollar, according to data compiled by Bloomberg.

"Of all the regional currencies, I would expect the Azeri central bank to value FX stability,” Timothy Ash, the London-based chief economist for emerging markets at Standard Bank Group Ltd., said by e-mail. "Remember they held the manat even through the Lehman crisis.”

 

(Bloomberg)