Azerbaijan May Float Its Currency
Azerbaijan may follow Kazakhstan’s suit and abandon currency limits to help boost export revenues, hamstrung by the slump in oil prices.
Oil and gas are Azerbaijan’s bread and butter, and the decline in petro-revenue means that the surplus in the country's current accounts -- the degree to which Azerbaijan exports more than it imports -- could shrink from $10 billion in 2014 to $2 billion this year, predicted Central Bank Chairperson Elman Rustamov, Trend reported.
As he primed parliament for the idea of a free-floating currency, Azerbaijan’s banker-in-chief took the politically correct step of presenting the change as a reflection of the country's growing integration with the global economy. To stay competitive as key trade partners devalue their currencies, Azerbaijan, the South Caucasus’ largest economy, must take far-reaching measures, the reasoning goes.
“Starting from 2014, the Turkish lira depreciated by 34 percent, the Russian ruble by 86 percent, Kazakhstan’s tenge by 66 percent,” Rustamov told the national assembly on October 13.
Rustamov said that free-floating the manat first requires "serious economic and technical preparations" and a "cold-blooded approach," but, nonetheless,
his remarks appear to have spread worry among Azerbaijanis that the manat will again be devalued.
In February, Azerbaijan sliced off over 33 percent of the manat's value against the dollar, effectively obliterating many personal savings and fueling a consumer-price increase as well as dollarization of the economy.
As President Ilham Aliyev’s government brooks few expressions of homegrown criticism, mainstream media generally snubbed this public anger over lost savings.
That said, it was difficult to miss. Conscious of the likely reactions to a further depreciation of the manat, the government, for now, seems to be putting out feelers to the public through its central bank chief.