Distinction between Banks and ‘Black Market’ Erased - Expert

From January 12, commercial banks have sharply reduced the rate of purchase of foreign currency from the population.

Turan’s monitoring of commercial banks shows that most banks  buy the dollar for 1.77-1.78 manat, but sell it for 1.86-1.87 manat.

In other words, the purchase and sale has a difference of 7-10 kopecks. Only in a few cases the difference between buying and selling is at 3-5 kopecks.

Interestingly, even the "black" market rate for the dollar is higher than in commercial banks. Thus, in the "black" market, the dollar is bought for 1.83 and sold for 1.86 manat.

It should be noted that on January 12, the Central Bank abolished the 4% margin for commercial banks in setting the rate for the sale of foreign currency, and now the banks set their own rates. The Central Bank calls it a real floating exchange rate.

However, a known economist Gubad Ibadoglu does not agree with this and believes that while the foreign exchange market has only two sellers (the Central Bank and the State Oil Fund), this mode cannot be called a real floating exchange rate.

“If the foreign exchange market has no other vendors and the amount of the proposed exchange is determined administratively, it is not a transition to a floating exchange rate,” he said, commenting on the market situation for Turan.

Referring to the large difference of buying and selling currency, the economist pointed out that this is the result of collusion of bankers. “In our country, the real owners of banks are a few oligarchs. As a result of collusion, these oligarchs set a particular rate,” the expert believes.

This situation contributes to the prosperity of the "black" market. In some cases, the line between the ‘black market’ and the banks is erased and moreover they stimulate it themselves.

“In any case, there was and there is no stability in the financial sector. I can predict that on an annualized basis, the dollar could reach 2.20-2.50 manat,” Ibadoglu said.     -71D-