Expert warns of devaluation threat
Azerbaijan`s currency is likely to face a drop in
value if the current economic trends persist, a local expert has
warned.
"If the ongoing processes stay the course, devaluation will be inevitable in Azerbaijan," Azer Mehdiyev said.
Amid a severe world financial crisis, the exchange rates of a number of CIS states` currencies have fallen. Russia, Kazakhstan, Tajikistan and Armenia have already been ordered to float their national currencies. However, Azerbaijani officials have said the issue is not on the nation`s agenda. Also, Azerbaijan has spent funds totaling $300 million so far in 2009 to support the stable rate of the manat.
However, Mehdiyev believes devaluation is in store in Azerbaijan despite all the pre-emptive measures being taken.
"The country has ample currency reserves for now. The process is also being restrained by the influx of currency to the country due to Azerbaijan`s slant toward beefing up oil production. But this is just a matter of time," the analyst predicted.
Mehdiyev did not rule out that political factors play a role in holding back the process of devaluation as well.
"The government is trying to avoid angering the population by refraining from lowering the manat rate ahead of the upcoming referendum," he said, but added that the process could actually begin after the nation votes on proposed constitutional changes on March 18.
The nationwide poll will cover a number of changes to the Constitution, but the main one pertains to removing a two-term limit on the president.
"If the ongoing processes stay the course, devaluation will be inevitable in Azerbaijan," Azer Mehdiyev said.
Amid a severe world financial crisis, the exchange rates of a number of CIS states` currencies have fallen. Russia, Kazakhstan, Tajikistan and Armenia have already been ordered to float their national currencies. However, Azerbaijani officials have said the issue is not on the nation`s agenda. Also, Azerbaijan has spent funds totaling $300 million so far in 2009 to support the stable rate of the manat.
However, Mehdiyev believes devaluation is in store in Azerbaijan despite all the pre-emptive measures being taken.
"The country has ample currency reserves for now. The process is also being restrained by the influx of currency to the country due to Azerbaijan`s slant toward beefing up oil production. But this is just a matter of time," the analyst predicted.
Mehdiyev did not rule out that political factors play a role in holding back the process of devaluation as well.
"The government is trying to avoid angering the population by refraining from lowering the manat rate ahead of the upcoming referendum," he said, but added that the process could actually begin after the nation votes on proposed constitutional changes on March 18.
The nationwide poll will cover a number of changes to the Constitution, but the main one pertains to removing a two-term limit on the president.
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