How Depositors in AZN and Borrowers in USD Should Act (UPDATED)

The sudden decision of the Central Bank of the sharp depreciation of the national currency caught by surprise depositors who have entrusted savings to banks in manat, as well as those with loans in US dollars.

Deposits for which citizens receive interest depreciated against the dollar by 34%, and borrowers in foreign currency will now have to pay the bank a 34% increase.

Meanwhile the government maintains an Olympian calm, economists and lawyers discussing ways to make the most painless and minimum losses out of this situation.

Some lawyers, referring to Article 439.7 of the Civil Code, assume that in the present circumstances a person owing the bank in US dollars can repay the debt at the rate of the dollar on February 21 - at the time of a sharp decline in the rate of the manat.

However, lawyers of banks are categorically against it. According to them, it is against the law and its subjective interpretation. Moreover, in these circumstances, banks may simply go bankrupt.

According to the economist Gubad Ibadoglu, this position is contrary to the law. Banks should also be interested in the solution to this uneasy situation, as most of their customers will be unable to fulfill the obligations in full within the agreed contract terms.

 The expert believes that under these conditions the way out may be the elimination of the contract due to "force majeure". Customers of banks on these grounds can write to creditors to review the agreement and bring it into line with the changed conditions, said Gubadoglu.

The same applies to deposits in manat. They may apply to the bank to change the interest rate on deposits. In this situation, banks are forced to deal with it, because otherwise, some of manat deposits may be withdrawn, which threatens reduction of bank assets, he said. -08B-

2015 February 24 (Monday) 10:02:36

On the morning of 24 February, many banks and exchange offices in the capital did not conduct foreign exchange operations. A similar situation was observed yesterday. Despite the assurances and announcements of the Central Bank, many exchange offices do not buy or sell currency at the new rate.

On the morning of Tuesday, exchange took place in the central office of Capital Bank, but a long queue was formed in front of the bank.

In exchange offices they told Turan that they had no money or no instruction came to carry out the operation.

The situation is similar with remittances, as people cannot send or receive money sent to them.

To get an explanation of the causes and how long this situation will continue is impossible.

Recall that the financial fever began on 21 February after the CBA sharply devalued the national currency manat by 33.5%.

Meanwhile, the Central Bank said that on February 23 10 exchange points of 6 banks violated the rules of exchange rates and their licenses were abolished.

According to unofficial data, we are talking about the artificially lowered rate of the national currency and the overvaluation of the dollar and the euro. -02B-