Is devaluation expected?

Baku/10.26.21/Turan: Recently media and social networks report on the possibility of another devaluation in Azerbaijan in January. According to rumors, the dollar exchange rate may soar up to 2 manats, and the price of gasoline with different octane numbers and even diesel fuel may rise.

It is believed that the depreciation of the national currency, the lira, in Turkey, one of the main trading partners of Azerbaijan, has increased the risk of depreciation of the manat. The recent dominance of the dollar over many currencies can also be considered a risk factor. How realistic are these statements? Is devaluation possible in the country?

Economist Rashad Hasanov  answered these and other questions in the "Difficult Question" program presented by Kamran Mahmudov.

According to Mahmudov, over the past 4.5 years, thanks to the financial policy pursued in the country, the Azerbaijani manat, in comparison with the currencies of its main trading partners, has significantly strengthened. In particular, compared to the Turkish lira, Iranian rial and Georgian lari. And this leads to the fact that the Azerbaijani economy is losing competitiveness.

The goods exported by Azerbaijan, in the markets of these countries, are unable to compete with similar goods, both locally produced, and imported goods from third countries. Since the prime cost is formed in accordance with the exchange rate of 2017, then when the price of the exported goods is converted into local currency, it becomes necessary to offer at a higher price than in the domestic market, which negatively affects the competitiveness of the goods.

The same is happening in the service sector. So, for example, a foreign tourist who used credit services in Azerbaijan, who once received $ 1 upon conversion, received AZN 0.8, today converting $ 1 receives AZN 1.7. And against the backdrop of devaluation, there has been a growth in the tourism sector. –0—