Azerbaijan’s FX frenzy continues amid speculation of devaluation

Economic expert Azar Mehdiyev says that manat’s rate depends mostly on the price of crude oil, which accounts for about 95 percent of Azerbaijan’s total exports.

"If crude prices continue to fall, the Central Bank will find it difficult to prop it up,” Mehdiyev said in an interview with Azerbaijan News Network (ANN).

 

Central Bank Governor Elman Rustamov has recently said manat will remain stable as long as crude prices are over 40 dollars a barrel. However, pressure on the Azerbaijani currency will increase if oil prices dip below 40 dollars/barrel and stay like that for a long time.

 

Azerbaijan in February devalued manat almost 35 percent against the dollar, setting the rate of $1/1.05 manat. Mehdiyev says the Central Bank can go for a gradual devaluation to ease pressure on the national currency.

"It is very difficult at this point to say how much manat can be devalued against the dollar,” he said. A sharp devaluation would require a political decision that will take into account budget revenue and spending, he said.

(Reporting by Orxan Aslanli)