Economists on consequences of manat stability at level of 1.7 to dollar
Economists on consequences of manat stability at level of 1.7 to dollar
The Azerbaijani manat maintains an exchange rate of 1.7 to dollar since the spring of 2017. At that time, the Central Bank of Azerbaijan announced that they had let the currency exchange rate float freely, and promised to carry out interventions only to prevent short-term volatility. Since then, the currency interventions have not stopped, the exchange rate remains at 1.7. However, foreign exchange receipts to the treasury from the sale of energy resources are steadily falling, and this worries economists: how long will the manat keep the rate that has become familiar to us - 1.7?
According to economist Rovshan Agayev, achievement of the stability of the manat through administrative pressure is beneficial to poor and import-dependent countries, since cheap imports do not allow the poverty of the population to grow. But then the losses of households and businesses in general are immeasurably high, as dollar investments and the value of conditional consumer baskets fall.
For example, R. Agayev writes on the social network, "in 2016-2024, with a stable dollar exchange rate, the minimum subsistence level in the country doubled in dollar terms, from $80 to $160.
This means that the $1,000 stored in the citizen's cup has lost the ability to buy the same product twice in 8 years. These calculations are based on the consumer index, but the cost growth in the indices of services, industry and the agricultural sector is much higher. Lost are even those who kept dollars not in a pot, but in banks, since the interest rates of bank deposits (1-1.5%) are able to protect against dollar-dependent inflation in the range of 10-12% at most.
Added to this is that the market of means of production in Azerbaijan is almost completely, and the consumer market is largely dependent on imports. The government, keeping the dollar exchange rate stable, argues for this policy by saying that in the absence of exports that need to be stimulated, at least we will keep imports cheap. But such a policy stimulates the country's dependence on imports and can drive the country into severe macroeconomic cataclysms in an era of declining revenues from the sale of natural resources," states Rovshan Agayev.
Economist, member of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship Vugar Bayramov reminds that the Central Bank's statement on the basic principles of monetary policy in 2024 emphasizes the dependence of maintaining a stable exchange rate of the manat on the world oil price.
"As you can see, this year, too, the oil revenues of the state, or rather, the balance in the energy market, will be the main factor influencing the exchange rate of the manat. The Central Bank's intention to continue dollar injections into the foreign exchange market indicates that in case of serious volatility in the energy market, the country's foreign exchange reserves may be in demand. This means that in 2024, too, the exchange rate of the manat will directly depend on the intentions of the Central Bank," V. Bayramov noted.
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- Politics
- 9 May 2024 11:23
Economics
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