Can the exchange rate of the manat change this year?
Can the exchange rate of the manat change this year?
The demand for US dollars in Azerbaijan has shown a steady upward trend over the past decade, which economists explain by payments related to the end of the calendar year. Despite the fact that the Central Bank (CBA) announced the transition to a floating exchange rate in 2015, the Azerbaijani manat has maintained a stable value of 1.7 manats per dollar since March 2017, after a double devaluation in 2015.
As Azerbaijan faces a decline in oil production and the financial burden of rebuilding regions recently liberated from occupation, speculation is emerging about the possibility of a significant change in the exchange rate of the manat in 2024. The uncertainty surrounding this issue is further exacerbated by the lack of clarity on the part of the Central Bank.
Vugar Bayramov, a member of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship, argues that the fate of the manat in 2024 depends on oil prices. He points to the Central Bank's decision on the potential readiness to intervene in the foreign exchange market, which signals a willingness to use foreign exchange reserves in response to the volatility of the energy market.
Economist Natig Jafarli shares this opinion, emphasizing the key role of oil prices in determining the trajectory of the manat. Speaking to Azadlig Radio, Jafarli suggested that as long as oil prices fluctuate around the current $80 mark, the manat remains safe. The government's budget calculations for this year reflect a conservative assumption of an exchange rate of 1.7 manats per dollar, which indicates an unwillingness to change the status quo in 2024.
However, Jafarli cautions that unforeseen circumstances, such as a substantial and prolonged drop in oil prices to $40-50, could compel the government to consider devaluation and implement necessary measures. The intricacies of Azerbaijan's economic landscape in 2024, including the delicate balance between oil market dynamics and the imperative to finance post-conflict reconstruction, will undoubtedly shape the course of the manat's exchange rate. As uncertainties persist, the government remains poised to respond to any extraordinary developments that may impact the stability of the national currency.
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- 2 January 2024 14:39
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Finance
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