“Journalists and some MPs think the manat rate is related to oil price. But there is no tie between the exchange rate and oil price. This was intentionally set up so. When we established SOFAZ in 1998, we knew that the funds to enter the country will be five times more than GDP. Therefore, we were sterilizing those funds from the economy and transferring to the State Oil Fund. As those dollars are not put on market, they don’t have impact on the exchange rate. How is the dollar put on the market now? In order to fulfil the budget obligations, the SOFAZ puts its dollar funds on the market, converts to manat and transfers to the budget. This is not related to the oil price. Because the SOFAZ did not purchase dollar when it was cheap and sell when it is expensive. The SOFAz is to fulfil budget obligations and it fulfils them by selling dollar agreeing with Central Bank and Finance Ministry when is needed. Oil price has impact on sustainability of our economy, but not on the exchange rate of dollar”, he said.
Regarding role of oil price in formation of exchange rate in Russia, Aslanli said: “Russia has Stabilization Fund and National Wealth Fund. There is a requirement on sale of funds to that fund. After the Stabilization Fund purchases needed funds, the others are directed to the Wealth Fund. Moreover, Russia-based oil companies depend on oil prices. When the oil price increases, their payments also increased. When their payments increase, they have to sell the dollar they got as revenue. Payments are usually done in RUB. Therefore, they have to sell lots of dollars. When lots of dollar are put on the market, the exchange rate automatically declines. Therefore, the oil price rise causes RUB to go up”.
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