In Azerbaijan, Ruble Purchases Surpass Sales

Last week, the Central Bank of Russia raised the interest rate from 18% to 19% annually. The decision to increase the rate was made against the backdrop of rising inflation expectations among the public and businesses.

The depreciation of the ruble in Russia is being closely monitored by some families in Azerbaijan. Many heads of families travel to Russia for work. For instance, a resident of Masalli region, A.N., told Radio Azadliq that her husband has been working as a restaurant manager in Saint Petersburg for many years: "In recent years, he has been able to send less money home. Since the price of the dollar has risen in Russia, everything has become more expensive. If my husband used to send home 900-1000 manats per month, now he barely manages to send 700 manats."

According to her, there are villages in the region where most of the residents rely on family members working in Russia for their livelihood: "In the past year or two, some have returned as the situation in Russia has worsened. However, they are finding it difficult to find work here."

How has the ruble's further depreciation in Russia affected the remittances sent to Azerbaijan? And does the ruble's exchange rate in Azerbaijan reflect the reality?

The Central Bank of Azerbaijan informed Turan that individuals sent $287.05 million in remittances from Russia to Azerbaijan in the first half of this year. This is a decrease of $320.85 million, or 52.9%, compared to the same period in 2023. "In the period from January to July, the share of remittances from Russia in total inflows was 50.6%. In mid-2023, this figure was 68.2%."

It was noted that as of today, September 18, the exchange rate of the Russian ruble remained unchanged from the previous day, at 0.0186 manats. "There has been no significant change in the exchange rate over the past month."

In terms of cash exchange operations involving the Russian ruble during the first six months of 2024, purchases amounted to 3.866 billion rubles, while sales totaled 1.177 billion rubles.

Economist Rashad Hasanov told Radio Azadliq that certain regions in Azerbaijan are more affected by the Russian economy, particularly in terms of income formation: "This trend is stronger in the southwestern and northern regions. In the Lankaran economic region, 10% of every 100 manats of income is generated through remittances. However, in reality, the situation is more difficult. In Shirvan, this figure is only 1%. Therefore, the impact of developments in Russia varies across different regions of Azerbaijan."

However, he believes that these impacts are not insurmountable: "With rational and long-term policies, they can be minimized, but under the current conditions and rules, it is impossible to completely avoid these effects."

The economist also emphasized that in Azerbaijan, the exchange rates of all currencies, except for the US dollar, are determined in relation to the dollar through cross-exchange rates: "This means that if a currency loses value against the US dollar, it automatically loses value against the manat as well."

In February 2022, Russia invaded Ukraine. Following this, Western countries expanded their sanctions against Russia (sanctions had originally started in 2014 after Russia annexed Ukraine’s Crimean region). Azerbaijan does not participate in these sanctions.