Central Bank Started Cheapening of Manat against USD and EUR

The Central Bank of Azerbaijan (CBA) from February 16 refuses to anchor the manat to the US dollar and switches to the dual-currency basket in determining the rate of the national currency.

This decision was taken by the board of CBA, said in the report of the Central Bank.

"It was decided to hold the exchange rate policy on the basis of the mechanism of the currency basket that includes the dollar and the euro," the statement reads.

The new operational framework, along with the conditions for the gradual adaptation of economic subjects, will provide flexibility of exchange rate policy and macroeconomic efficiency. "

In practice, all this means that the rate of manat against major world currencies - the euro and the dollar - will be cheaper.

Previously, the need to streamline the exchange rate of manat was also expressed by the head of state. At a cabinet meeting at the end of last year, he said that "fair" exchange rate is when one manat is equal to one euro. At the moment, one manat is worth 1.1 euros.

According to Aliyev, the reduction of the AZN rate will facilitate foreign trade operations.

On 18 December 2014 the official rate of AZN against USD was kept at 0.7844 manat. From today, the dollar rose by 0.05 per cent - up to 0,7848 AZN / USD.

The head of the Central Bank Elman Rustamov in an interview with the Financial Times said that in order to maintain the current rate of manat the government has spent 1.5 billion last year, which is too burdensome for the state currency reserves.

At the same time, the authorities intend to carry out this process very gently, so as not to cause panic and respect the interests of the citizens, he said.

In turn, experts believe that the refusal of bank deposits in manats in favor of USD and EUR will increase. At the same time, inflation and rising prices for import will accelerate.   -0-