Head of Central Bank: No major changes in exchange rate policy of Azerbaijan are expected until end of year

Baku: “Major changes in the exchange rate policy of Azerbaijan are not expected until the end of 2015”.

The chairman of the Central Bank of Azerbaijan Elman Rustamov said at the meeting of the Milli Majlis (Parliament), dedicated to the government’s report on the activities in 2014, APA reports.

Elman Rustamov that the Central Bank of Azerbaijan devalued manat because of lower oil prices.

“The events in the external environment influenced on manat. In fact, it should be understood that the devaluation, the correction is not subjected to manat/dollar but to oil prices. After a sharp strengthening of the manat against the euro, we went to the bi-currency basket. Naturally, this process has given some flexibility in the exchange rate, which immediately began to be felt in the market. We have witnessed a great rush.

To eliminate the hype we have recently been forced to spend every day for about $ 500 million. If we consider that our foreign exchange reserves amount to little more than $ 10 billion, then you (deputies – ed.) can calculate how much time it would take to suppress the excitement.

This is one side of the issue. Our calculations showed that at this rate, about 70% of the dollarization manat supply in the country could be transformed into dollars.

These reasons could lead to loss of control over the rate of manat. In such circumstances was decided to hold a correction rate of manat. I believe that this decision serves the strategic interests of the country. In the case of non-acceptance of this decision, we subsequently had to go for a more assertive devaluation”, said E. Rustamov.

The head of the Central Bank also noted that the decision to conduct devaluation is extremely important in terms of maintaining macroeconomic stability and economic diversification.

SOURCE: Azeri-Press News Agency