Vugar Bayramov: “Azerbaijan Will Most Probably Move to Liberal Floating Exchange Regime”

Vugar Bayramov: “Azerbaijan Will Most Probably Move to Liberal Floating Exchange Regime”

Next year, the likelihood is high that the Central Bank of Azerbaijan following the example of Russia and Kazakhstan will move to a liberal floating regime of the national currency, Vugar Bayramov, the well-known economist in Azerbaijan, says.
Dr. Bayramov underlined that, in this case, even transfers from the Oil Fund will not be able to prevent the depreciation of the manat, the national currency of Azerbaijan.

According to him, even if world oil prices reach $ 60, it does not help strengthening the manat.

Bayramov said that, along with the price of oil, the costs of the State Oil Fund are also important, as the fate of the manat at the moment does not depend on the intervention of the Central Bank, and is determined by the amount of dollars offered by SOFAZ.

“For the first 9 months of 2016 the Fund sold $ 4 billion and spent just 3 billion 823 million manat. If we consider the ratio of the manat to the US dollar during this period, it can be said that the surplus of the national currency in the Fund is about 2 billion 440 million. It is natural that with such a surplus of AZN the Fund for a long time will not be able to join the foreign exchange auction, and this is not the strategy of the Fund,” said Bayramov.

In his opinion, it means that the main factor for the manat will be government spending and selling dollars by the State Oil Fund.

The expert noted that the Central Bank, which has lost 75% of its reserves, with a reserve of 4 billion dollars will not intervene directly in the process.

“This means that the increase in oil prices will not reduce the dollar demand in Azerbaijan, and in this context, the strengthening of the manatt is not real,” he said.

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