Azeri cenbank says it is carrying out tight policy to preserve stability

01.12.2016 09:30

Azerbaijan's central bank is carrying out tight monetary policy to preserve stability, its head Elman Rustamov told the former Soviet republic's parliament on Wednesday.

Rustamov added that banks were not in stable condition in Azerbaijan, whose commodity-dependent economy has been hurt by weak oil prices.

Bowing to pressure from the oil price slump, the Azeri government cut the projected oil price in this year's budget to $25 per barrel earlier this year and moved the currency to a managed float, easing pressure on foreign exchange reserves.

It also slashed its economic growth forecast for this year to 2.8 percent contraction, dramatically revising down its previous forecast of 1.8 percent growth.

The manat currency traded at 1.7318 per dollar on Wednesday, a new low. Some banks had halted or limited sales of hard currency to $100 per person in recent weeks, raising fears of another devaluation.

"The manat's rate has adapted to float under the oil price of $45-$55 per barrel," Rustamov said. "If oil price rises or declines by $10 from that level, revenues of citizens grow or decline by 1.7 billion manats."

The Azeri central bank raised its refinancing rate to 15 percent from 9.5 percent on Sept. 9.

Rustamov said the Caucasus country's current account deficit was expected to reach $5 billion by the end of 2016.

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