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Dollar fell 5%, euro slip 9% in Azerbaijan last year

05 January 2009 16:12 (UTC +04:00)

At the same time, the euro fell 9.29% or to 1.1292 manats from 1.2448.

As shown in the diagram, the 15-nation currency started to appreciate against the manta after November in contradiction to the trends on the world markets.
In general, dollar/manat and euro/manat rates are easily affected by external factors.
The dollar-euro move manifests itself immediately in dollar-manat and euro-manat moves because of the use of the two-currency basket regime in the country.
Before November 2008 there was appreciation of the dollar and the euro as a result of the global financial crisis, there. The main reason was that investors sold risky assets, and used the dollar to buy treasury bonds.
As the macro-economic factors were equally disadvantageous to the U.S. and eurozone rates, investors make decisions daily by tracking macroeconomic news.
To make predictions on rates is inappropriate now because dollar/euro weight will now depend on the first steps to be taken by the new U.S. administration.
The new administration is likely to provide the American economy with more money, and this could lead to a decline in the dollar. The US external debt hitting a historic high also increases the pressure on the dollar. The dollar trend remains unpredictable, depending on the US decision to repay the debt to China.
As to Azerbaijan, given the important role of the dollar in the economy of Azerbaijan, one can say that the National Bank will not allow its considerable depreciation. Instead, we can expect the euro rise against the manat.
Meanwhile, information about some countriesâ€™ gradually getting rid of the dollar becomes official. In the case of extreme depreciation, this measure can be considered as a preventive step and it is possible that Azerbaijan is also not stay away from these trends.