Is another devaluation expected in Azerbaijan?

In recent days, there have been reports in the media that a new devaluation will take place in Azerbaijan in the near future.

Economist Natig Jafarli believes that a decrease in the high trade and balance of payments balance may lead to a fall in the value of the manat or devaluation in the near future.

According to him, the country's balance of payments has been declining in recent months. There is a noticeable difference between the goods that a country sells and the goods that it buys. Usually, the government ended the year with a surplus of 7-8 million dollars. It even happened that the year ended with a positive balance of 10-12 million dollars. Now, due to the reduction in oil production and the fall in gas prices below the expected level, the inflow of foreign currency into the country has decreased. Therefore, there is no high balance in both the trade and the balance of payments.

The expert believes that such a decision may be made due to the devaluation of the manat or the fall in the exchange rate of the manat. Since a significant increase in oil production in Azerbaijan is not expected

According to him, international organizations also predict that oil production in Azerbaijan will decrease. In these circumstances, a decision may be made regarding the manat.

"We have an administrative regime of the exchange rate, that is, the process is not regulated by the market. Therefore, the probability of devaluation is quite high," the expert says.

The Azerbaijani manat was devalued twice in 2015. The first devaluation occurred on February 21, 2015, when the Central Bank of Azerbaijan devalued the manat by 33.5%, setting the new rate at 1.05 manat per US dollar, down from 0.78 manat per US dollar. The second devaluation happened on December 21, 2015, when the Central Bank switched to a floating exchange rate, resulting in a further depreciation of the manat by about 48%, with the new rate set at approximately 1.55 manat per US dollar. These devaluations were primarily driven by the sharp decline in global oil prices, which significantly impacted Azerbaijan's oil-dependent economy.