Azerbaijan is one of several former Soviet republics that have been forced to devalue their currencies following a plunge in oil prices and Russia's rouble.

Oil and gas account for 95 percent of Azerbaijan's exports and 75 percent of government revenues.

"If the average oil price is in a range of $50 per barrel and the economic situation in Azerbaijan's main trade partners is stable, I don't see any problems for the manat's stability," central bank head Elman Rustamov told state television AzTV.

The central bank allowed the manat to fall by 33.5 percent versus the dollar and 30 percent against the euro on Feb. 21. Five days earlier, it had abandoned the manat's dollar peg and adopted a dollar-euro basket to manage the exchange rate.

The currency's official exchange rate of 1.05 manats to the dollar has not changed since February.

Azerbaijan's foreign currency reserves rose by $42.9 million in May and by $89.4 million in June to $8.5 billion as of July 1. Rustamov said the central bank had received $300 million from commercial banks in exchange for the national currency.

Rustamov said the manat's devaluation was "correct and justified, but a difficult and unpopular move."

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 $58 a barrel. ($1=1.05 manats)

 

(Reuters)