Finance

Finance

AzerbaijanÂ switches to floating rate of manat

21 December 2015 07:27 (UTC +04:00)

The decision has been made taking into account the strengthening of long-term shocks in foreign economy in order to equilibrate the balance of payments, keep the foreign exchange reserves in the country at critical level and ensure the competitiveness of national economy on the international arena, said the statement from the bank.

Complicated processes, recent decisions of leading central banks, increase of supply in the market of world energy carriers, decline of economic growth in the several developed countries which have the largest economy and are main oil consumers, as well as other global factors have led oil price to decline over three times since June 2014.

All these processes have also affected Azerbaijan’s economy. “Trade surplus of the country and other sources of foreign exchange receipts have sharply declined. Taking into account the serious pressures on the currency market and manat rate, the manat was devalued in February 2015 and the economy, currency market and manat rate have been adapted to the oil price of $50-55$.

However, rapid decline of oil price since July 2015 has significantly increased the impact on currency market and exchange rates at the same time, devaluations in the partner countries have negatively affected international competitiveness of the national economy. As a result of volatile during recent months, national currencies of several partner counties have been devalued by over 100%.

The current situation made currency market and manat rate adapt to the new oil prices,” said the statement.

According to this decision, rate of manat will be set in accordance with the impacts of fundamental factors which determine demand and supply ratio in the currency market. Participation of the Central Bank in the currency market will be carried out in accordance with this mode.

At the same time, in order to provide security of personal savings and other deposits in the banks, measures will be taken to take improve the financial sustainability, strengthening of capital and liquidity position, system of insuring the deposits, said the statement.