Azernews.Az

By Nigar Abbasova

Strengthening of the USD against the Azerbaijani manat is connected with the economic processes ongoing in the country and fundamental changes in the structure of its economy, said Farkhad Amirbeyov.

“The process has its own logics. The USD strengthening is triggered by fundamental changes that occurred in the structure of the economy, which in its turn lead to the decrease of income and search of new sectors that may be attractive for investments. As a rule, such periods are characterized by reduction of tax proceeds. Investors, in such cases, opt to act with caution and do not make investments. Many businessmen take time-outs for the assessment of new risks and search of new opportunities,” he said

He noted that currently Azerbaijan is passing through such period, therefore the rate of the national currency does not yet reflect the new reality.

“Currently, investors and businesses are waiting for the decision of the government on what priorities will be set for the economic reforms, whether the dominating role in the new economic model be assigned to the government or private business and what sources of investments will be used. The issue has not yet been clarified and the influx of investments is not expected. Therefore, the manat will continue to preserve the level of support,” Amirbekov said.

However, he is sure that the “standby mode” cannot be long-lasting, as the time is a very expensive resource.

“Investments will outflow to other countries, should the identification of priorities and the role of the state and business drag on. Considerable outflow of funds, in turn will intensify pressure to the national currency. Therefore, in my opinion, identification of priorities should be completed this year. We have a number of tasks connected with the resumption of the economic growth, improvement of the situation in the labor-market, rise of the investment activity and growth of tax proceeds,” he added.

He also mentioned that the double devaluation, which occurred in 2015, has stimulated a number of processes including creation of the Financial Market Supervisory Body and Financial Stability Council.

“The country has recognized the importance of the financial component of economy. Our current financial priorities are the quality of management and financial resources,” he added.

The Central Bank of Azerbaijan switched to a floating rate of the manat, on December 21, 2015 following intensified external economic shocks. The Bank abandoned its dollar peg thus allowing the currency to tumble by almost a third.

The highest rate of the US dollar against the manat, since the beginning of the year was fixed on Mach, 11 and stood at 1.6456 AZN/USD, while the bottom-low rate of the dollar was observed on June 25-26 and stood at 1.49 AZN/USD.

The official exchange rate of the Azerbaijani manat against the US dollar was set at 1.5851 manats for July 29, according to the Central Bank of Azerbaijan (CBA). The rate of the national currency against the US dollar dropped by 0.2 percent, as compared to its previous index.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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