Azerbaijani manat rate set in line with floating rate principles

Rustamov made the remarks Nov. 30 during discussions on the draft state budget and concept of social and economic development in 2017 and the following three years.

Discussions on the budget started Nov. 30 during the joint meeting of parliamentary committees on defense, security and fight against corruption, on economic policy, industry and entrepreneurship, on agrarian policy, on public unions and religious structures and on natural resources, energy and ecology.

Rustamov said that currently, manat’s rate is regulated in accordance with principles of floating rate.

"Despite this, there is a policy to regulate the rate at a certain level in order to help manat to find its value. We can’t forecast what will happen to manat’s rate, if we completely stop regulating it,” noted the CBA head. "Our activities are aimed at increasing macroeconomic stability in 2017, stabilizing manat’s rate at a necessary level, stability of prices and reducing inflation.”

"After that, we will have enough opportunities to pass to the development,” he added.

The CBA switched to the floating rate of manat on Dec. 21, 2015, as a result of which the exchange rate of dollar and euro increased by 47.6 percent and 47.9 percent and stood at 1.55 and 1.685 manats, respectively.

In late September 2016, the CBA, in order to ensure more flexible participation of banks in the money market, decided to introduce new mechanism of holding auctions on currency sale that allows banks to apply both for the purchase and sale of foreign currency.

Under a new mechanism, the official rate of manat is set, based on the weighted average rate in accordance with the transactions concluded with commercial banks in the interbank foreign exchange market and in auctions.

On the days when no auction is held, manat’s official rate against the US dollar will be set based on the weighted average rate formed in the currency market on the basis of the currency purchase and sale transactions between banks.