Expert: Either Accept Reduction in Foreign Exchange Reserves, or Devaluation

The Central Bank of Azerbaijan will either accept the fact that foreign exchange reserves are melting, or will have to make devaluation, according to the expert on banking issues, Akram Hasanov.

According to his interview with Azadlig radio, the Central Bank has not taken any public steps in this direction.

‘The Central Bank sells commercial banks a certain amount of dollars, thus fully satisfying their needs in US currency. In this regard, banks impose restrictions on the sale of dollars to their customers. But this cannot continue for a long time. Otherwise, the "black market" will grow,’ he said.

Hasanov recalled that he had previously predicted that the Central Bank will be forced to give banks manat loans.

‘In contrast to the leading states, in Azerbaijan there is no control over where the Central Bank’s credits in national currency are directed. In this regard, most of the manats is sent to the foreign exchange market. The gradual devaluation contributes to this,’ Hasanov said.

According to the expert, anyone who has free money tries to buy foreign currency.

‘On the other side, the depositors of closed banks are issued the compensation in manats and the depositors getting their money immediately try to buy dollars. In short the demand for USD increases,’ said the expert.

Recall that on August 22 the official dollar exchange rate was set at the 1USD / 1.6204AZN level.

The record high exchange rate of the dollar against the manat after the second devaluation was established on March 11, 2016 - 1USD / 1.6456AZN.

The lowest rate of the dollar was set on 25-26 May 2016. In those days, manat strengthened to the 1USD / 1.49AZN level.    -----71B