Arab Today, arab today oil price slump forces azerbaijan to stop propping up currency
Last Updated : GMT 14:51:15
Arab Today, arab today
Arab Today, arab today

Oil price slump forces Azerbaijan to stop propping up currency

Arab Today, arab today

Arab Today, arab today Oil price slump forces Azerbaijan to stop propping up currency

A rally in Baku on March 15, 2015 against the devaluation of the manat
Baku - AFP

Energy-rich Azerbaijan, whose economy has been hit hard by falling oil prices, withdrew support Monday for its embattled currency and the manat plunged by nearly a third against the dollar.

The manat's plummet spurred jitters, with major retailers halting business in the ex-Soviet country and anxious consumers fearing for their future.

"The central bank took the decision to switch to a floating exchange rate for the national currency as of December 21," the regulator said in a statement.

It said the decision was taken because "falling oil prices and the continuing devaluation of partner countries' currencies has begun to negatively affect the Azerbaijani economy."

The manat was trading at 1.55 against the dollar on Monday, down 32.3 percent from Friday.

The country's central bank has spent more than half of its foreign currency reserves -- which it said had reached "critical levels" -- to support the manat, in free fall since the beginning of the year.

"I expect the manat to further devaluate," analyst Samir Aliyev told AFP. "The era of a stable manat has ended."

"The main problem is that the national currency's collapse will inevitably lead to higher inflation rates."

- Consumer anxiety -

Businesses in Azerbaijan have reacted nervously to the slump in the manat's value, with major retail chains shutting up shop Monday as prices of imported goods were expected to rise sharply.

"We closed today all our shops to revise prices upwards," a manager at Azerbaijan's largest electronics retailer told AFP on condition of anonymity.

Others expressed fears that the devaluation would threaten the banking sector's stability and lead to loan defaults as a majority of mortgages and loans in Azerbaijan are dollar-denominated.

"I don't know if I will be able to repay my mortgage which I have taken out in dollars," Arif Gasanov, a 40-year-old Baku resident, told AFP.

"After the manat collapsed I'll have to pay to my bank much more than expected, much more than I can afford."

Fitch said Azerbaijan's move would ease the oil shock's fiscal impact but is likely to hit growth and hurt the banking sector.

"In the medium term, the devaluation will have a negative impact on banks' asset quality, as loan dollarisation is high," the rating agency said in a statement.

- Regional implications -

Azerbaijan's decision came after the energy-rich Central Asian nation of Kazakhstan abandoned its currency band for a free-floating exchange earlier this year.

Analysts said the move would not affect the Russian ruble but would negatively impact the majority of regional currencies.

"The move can be considered to be neutral for Russia: the weak ruble, in addition to low oil prices, was itself the trigger for Azerbaijan's currency move," said Oleg Kouzmin, an economist with Renaissance Capital.

He described the prospects for Kazakhstan's tenge as "slightly negative," adding that the Georgian lari -- which has lost nearly 45 percent of its value against the dollar since November 2014 -- is expected to be most affected.

Energy exports constitute up to three quarters of Azerbaijan's state revenues, making the Caucasus country's economy highly dependent on global oil prices.

The Caspian nation in February abandoned its dollar peg and switched to a dollar-and-euro basket and also devalued the manat by more than 33 percent.

The International Monetary Fund said in a forecast earlier this year that Azerbaijan's once booming economy had been expected to grow by just 2.5 percent in 2016 compared with the already modest 4-percent growth rate this year.

Oil prices extended losses Monday, with Brent at one point sinking to $36.09 a barrel -- its weakest since July 2004.

 

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today oil price slump forces azerbaijan to stop propping up currency Arab Today, arab today oil price slump forces azerbaijan to stop propping up currency

 



Arab Today, arab today
Arab Today, arab today Mohamed Bahari prepares new collection for spring 2017

GMT 06:15 2017 Monday ,27 February

Mohamed Bahari prepares new collection for spring 2017
Arab Today, arab today 17.4 million tourists visit UAE in 2016

GMT 00:47 2017 Monday ,27 February

17.4 million tourists visit UAE in 2016
Arab Today, arab today Sheds light on major steps in 12-year career

GMT 06:07 2017 Monday ,27 February

Sheds light on major steps in 12-year career
Arab Today, arab today UN envoy sets out framework

GMT 07:25 2017 Monday ,27 February

UN envoy sets out framework
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars

GMT 06:44 2017 Sunday ,26 February

Doubts grow over American stock market’s surge

GMT 06:26 2017 Sunday ,26 February

Copper recovers lost ground

GMT 15:53 2017 Saturday ,25 February

Bahrain Bourse daily trading report

GMT 14:28 2017 Saturday ,25 February

Gold hits 3.5-month high

GMT 03:11 2017 Saturday ,25 February

50 Tunisian exhibitors at Gulfood 2017, Dubai

GMT 02:19 2017 Saturday ,25 February

SIEL expo, March 1-4
View News in Arabic - Business: أسواق مالية
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Reasons for the delay 'On the Stairs of Servants'

GMT 06:42 2017 Saturday ,25 February

Reasons for the delay 'On the Stairs of Servants'
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 07:23 2017 Friday ,24 February

Ola Ghanem hopes to work with M.Ramadan

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"

GMT 10:51 2017 Saturday ,25 February

Pigs with edited genes show resistance

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday