There are no prerequisites for growth of the exchange rate of the US dollar against manat in Azerbaijan, Chairman of Central Bank of Azerbaijan Elman Rustamov said at a press conference in Baku on April 26. According to him, the rise in prices of Azerbaijani oil provides replenishment of international currency reserves, which has a positive effect on the stability of the manat. "The macroeconomic situation in Azerbaijan is stable, and there is a surplus in the balance of payments,” he added.
Interestingly, what does the current economic situation in our country promise about the manat's rate?
Economist Vugar Bayramov noted that the rate of the manat influences on other economic indicators as well. "It is important that the manat rate remain stable in 2019. Because practically the exchange rate of manat directly affects other economic indicators, including prices. Therefore, the Central Bank should try to keep the exchange rate stable in 2019. But there are external and internal factors affecting the exchange rate of manat. The main factor influencing the exchange rate is the exchange rate of national currencies in countries where we are partners in our non-oil export, at the world market price of oil. In particular, the ruble exchange rate in neighboring Russia has a direct impact on the manat. Russian ruble is currently stable. Of course, this is important for the manat. But Russian ruble has a connection with oil prices. From that point of view, the market price of oil and the ruble regulate each other. At present, the price of one barrel of oil in the market is above $ 70, which can be considered acceptable. But it is difficult to predict how price will change in the next period. Because the US will have an impact on OPEC's increase in oil production, and if the OPEC stepps up sharply in the next stage, it may cause a reduction in oil prices," the economist said.
Bayramov added that the main criterion for the Central Bank is the volume of currency within the country, the price of oil in the world market. That is, the change in manat's exchange rate in 2019 will directly depend on the factors and the position of the Central Bank.
Economist Ramin Rahimov stressed that if the Central Bank is able to maintain its currency reserves and oil revenues will allow this, the rate of manat will remain constant this year. "In fact, the exchange rate of manat is expected to remain stable. At present, the price of oil in the market is higher than the expected average. That is, the income from oil revenues allows the government to maintain a stable rate of the manat through administrative intervention. At the same time, the demand for the dollar has declined lately. Therefore, pressure on the manat is not observed. On the other hand, the issuance of enough manats by the state on the issue of troubled loans creates an incentive for the development of the economy. This also reduces the demand for the dollar. In fact, the state itself is also interested in keeping the exchange rate stable. Probably by the end of the year the manat will be around 1.69-1.72, which means that it will not be exposed to high pressure," he said.
The expert noted that the steady exchange rate of manat conditioned the recovery of the economy. "The stable level of the manat has a positive impact on the development of all sectors of the economy. Because entrepreneurs are convinced that there is no pressure on the manat and the ratio of the dollar to manat remains unchanged. They carry out import and export operations with ease. In previous years, in conditions of instability, entrepreneurs were careful about their business and lending operations. As a result, there was a stagnation in the economy. The stability observed in the exchange rate of the manat in the last year is conditioned by revival in the economy," he added.
Rahimov said there is no fundamental basis for changing the rate of the manat. "One of the requirements for the financial sector in the Strategic Roadmap is to provide financial transparency, appropriate reforms and support the financial institutions to stimulate the economy. This support is also a continuation of foreign exchange policy as a subject of monetary policy of the Central Bank. True, we have adopted a floating exchange rate policy. Here, the value of the currency is formed on the basis of supply and demand. But the Central Bank is able to confirm the fixed exchange rate for the next day by holding auctions. That is, even if the floating exchange rate policy is liberal, the Central Bank ensures stability of the manat. By the end of the year it is planned that the oil price will not fall below $ 60, which means the increase in the volume of foreign currency transfers to the state budget by the Oil Fund. The increase in foreign currency revenues reduces the pressure on the manat. Finally, I have to say that there is no fundamental basis for changing the manat at this time," noted the expert.