CBA says manat may continue strengthening

The Central Bank of Azerbaijan (CBA) does not rule out the possibility of further strengthening of the manat rate.

“Today we see that the manat rate is going towards strengthening, because the balance of payments is very good, oil prices are favorable,” Chairman of the CBA Elman Rustamov told reporters during the opening ceremony of the new head office of Ziraat Bank in Baku on October 31.

The exchange rate of Azerbaijan’s national currency, the manat, against the US dollar has strengthened by almost 4 percent since the beginning of 2017, and is set at 1.7002 manats/$1 for October 31.

He went on to say that the CBA does not intend to give up the floating exchange rate of the manat, adding that this regime has proved its effectiveness.

“Azerbaijan plans to constantly use the floating exchange rate regime of the manat. In general, this is required by both the economic realities of the country and international experience. Many countries are now preparing to switch to a floating exchange rate regime,” said the chairman, adding that “The floating exchange rate of manat is the most effective way for maintaining the exchange rate of the national currency and ensuring its stability against negative factors.”

Rustamov also noted that currently, the exchange rate of manat varies freely and does not have a certain corridor within which it could vary.

The manat rate fully operates in floating regime and depends on a number of macroeconomic and external factors, such as the cost of oil, the balance of payments, he added.

The Azerbaijani government switched to the floating manat regime on December 21, 2015. The exchange rate of Azerbaijan’s national currency, the manat, against the U.S. dollar has strengthened by almost four percent since the beginning of 2017, and the exchange rate was set at 1.7002 as for October 31.

Previously, Rustamov said that the Azerbaijani government does not see any risks for the manat rate.

“The positive trend is usually formed due to the surplus of the current account of the balance of payments. Today we expect that the current account surplus will amount to about $1.5-2 billion.”

“An important question is that how much would the strengthening of manat would be in line with the economic strategy, in particular, export diversification, but so far we do not see such risks," Rustamov said then.