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Qabil Ashirov

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Azerbaijan expects to keep the manat at 1.70 to the US dollar through 2030, signalling the government’s confidence in the country’s current currency framework. But the outlook is about more than maintaining a fixed exchange rate. Rising household savings in manat, declining deposit dollarisation and a sharp increase in the Central Bank’s foreign exchange reserves suggest that the foundations of currency stability remain firm. Together, these trends offer a useful insight into how Azerbaijan is managing financial confidence amid uncertain global markets. The key question is whether growing reserves, energy export revenues and domestic demand for the national currency will be sufficient to sustain the current exchange rate over the next four years.

The Ministry of Economy has incorporated the 1.70 exchange rate into its macroeconomic projections for 2027–2030. According to the government, the stable manat has helped create favourable conditions for domestic demand, limit currency risks in financial and consumption decisions, and strengthen the national currency’s position in household savings. These developments offer an important foundation for confidence among depositors, businesses and investors.

Banking statistics provide tangible evidence of this confidence. According to Azerbaijan’s State Statistical Committee, individual deposits in banks reached 18.21 billion manat at the end of August 2026, representing annual growth of 17.8%. This expansion demonstrates the growing volume of financial resources held by households within the domestic banking system. Rising deposits also strengthen banks’ funding base and expand their capacity to finance economic activity.

The currency composition of these savings offers an equally important indicator. Central Bank Chairman Taleh Kazimov reported that individuals’ manat-denominated deposits increased by 1.3 billion manat, or 11.6%, during the first half of 2026, reaching 12.5 billion manat at the end of June. The dollarisation rate of resident individuals’ deposits declined to 25.6%, a reduction of 3.8 percentage points since the beginning of the year. These figures illustrate households’ growing willingness to maintain savings in the national currency.

The Central Bank’s foreign-exchange operations provide another significant indicator. Excess foreign-currency supply in the domestic market has enabled the regulator to purchase dollars and accumulate additional reserves. In April 2026, the Central Bank purchased $1 billion through foreign-exchange interventions. Its June purchases added another $394 million. By July 30, total purchase-oriented interventions conducted during the year had reached approximately $2.077 billion, according to the Central Bank chairman’s statements.

These operations coincided with a substantial increase in the Central Bank’s foreign-exchange reserves. By October 1, 2026, reserves had reached $15.363 billion, up $4.053 billion, or 35.8%, year on year. The accumulation of reserves strengthens the monetary authorities’ financial capacity to manage currency-market conditions and support confidence in the existing exchange-rate framework.

The broader geopolitical environment adds another dimension to this assessment. In our view, the Russia–Ukraine war is unlikely to reach a comprehensive settlement in the immediate future, given continuing military operations and the significant differences surrounding the terms of a potential agreement. The US–Iran conflict and the escalating confrontation involving Yemen also carry substantial uncertainty. We assess that these conflicts could continue over the next one to two years, keeping energy markets and regional security conditions sensitive to geopolitical developments.

For Azerbaijan, these developments make the country’s foreign-exchange position particularly relevant. Energy exports remain an important source of foreign-currency earnings, while accumulated reserves provide an additional financial buffer. International oil-market conditions, export receipts and domestic demand for foreign currency will continue to influence the monetary environment. Meanwhile, the Central Bank’s recent dollar purchases demonstrate that market conditions have generated opportunities to strengthen its reserve position.

Taken together, the government’s four-year exchange-rate projection, rising household deposits, increasing preference for manat savings and the Central Bank’s expanding foreign-exchange reserves support a favourable assessment of the national currency’s prospects. In our view, these indicators suggest that the manat has a credible opportunity to preserve its current position through 2030, provided that the principal economic conditions supporting the existing exchange-rate framework continue to hold.

The central message is that currency confidence rests on measurable financial foundations. Azerbaijan enters this medium-term period with growing household savings, a stronger reserve position and an established exchange-rate framework. These factors reinforce the case for continued manat stability and provide a solid basis for financial planning across the economy.