History of AZN Develops in Unfavorable Scenario

The Bank of America believes that Azerbaijan will have to abandon the peg of the manat to the US dollar in the near future, and arrange devaluation of it by 30% - 35%, or follow the example of Russia and Kazakhstan, and enter the floating exchange regime course.

The Azerbaijani manat remained immutable (except devaluation in February), but this is costly for the country to which the oil is also an important export item.

According to forexpf.ru, Bank of America said that to maintain the exchange rate of manat Azerbaijan spent about 25% of its reserves, and in the present situation, when oil is likely to continue to fall in price, the continuation of such a policy seems unrealistic.

This forecast is based on the preservation of the future of oil prices at a low level. Over the past year and a half the price of Brent crude oil has decreased by 2.6 times to $ 43 per barrel. This is the lowest index since March 2009.

In April this year, after the 35% devaluation in an interview with Turan the Doctor of Economic Sciences, leader of the Movement for Democracy and Prosperity Gubad Ibadoglu noted that the leadership of the country has two options to solve the problem of return of the State Oil Fund. One is hypothetical - the average price of the local grade of oil should not be less than $ 75 per barrel, to compensate for the loss. The second option is another devaluation of the currency at the rate of $ 100 to 150 manat. This is the best approach, so that the public will have to prepare for a second wave of lowering the standard of living - but now not by 35%, as it was on February 21, but by 50%.

Since the government has no additional sources of funding, it will once again have to put forward the head of the Central Bank and through him to announce a new wave of devaluation. -0-