Elman Rustamov Tries to Explain Devaluation Is Good

There is no reason for long-term weakening of the manat. Devaluation may occur in two cases: if the trade balance deficit is observed long or foreign exchange reserves are absent. This was said in an interview with AzTV by the head of the Central Bank of Azerbaijan Elman Rustamov.

"Our foreign exchange reserves account for almost 70% of GDP and nearly 2.5 times the amount of AZN in circulation," he said. At the same time Rustamov considers unfounded concern of the citizens with depreciation of the manat.

In 2008-2011, during the global financial crisis, Azerbaijan's exchange rate policy was based on the mechanism of the two-currency basket including the dollar and the euro. This allows for a more flexible exchange rate policy. However, in the context of high oil prices and high balance of payments surplus, the manat rose in price relative to the euro. At the same time, the euro began to fall against the dollar. Therefore, the manat has grown considerably against the euro.

A strong currency has its own advantages, such as low inflation, but it is bad for export.

Note that from February 16, CBA has reduced the rate of the manat to the US dollar, and in two days the dollar rose to AZN 0.11% - up to 0.7853. -02D-