Azerbaijan Spends 8% of Reserves as Ruble Rout Lashes Currencies
By Zulfugar Agayev
Jan 13, 2015
Azerbaijan’s central bank spent about 8 percent of its international
reserves to defend its currency last month as the crisis in Russia and
slumping oil prices forced devaluations in other former Soviet states.
The central bank used $1.13 billion from its currency holdings to
support the manat in December after buying $1.27 billion in the first
11 months to keep it from strengthening, the regulator in Baku said in
an e-mailed statement. The manat appreciated 0.1 percent against the
dollar last month.
`As a result of the quick regulatory measures, stability was ensured
fully in the currency market,’ the central bank said, adding that it’s
already returned to purchasing foreign currency after last month’s
sales.
Contagion from the Russian ruble’s decline of more than 40 percent
last year has rippled through the former Soviet Union, putting
pressure on currencies from Belarus to Armenia. Azerbaijan’s central
bank has vowed to keep the manat stable even as economic growth slowed
to 3 percent last year from 5.8 percent in 2013 because of a slump in
oil prices and production. Azerbaijan, the third-biggest crude
producer among ex-Soviet republics, relies on hydrocarbons for more
than 90 percent of exports and 45 percent of gross domestic product,
according to the International Monetary Fund.
The central bank said the manat’s stability is key to steadying the
broader economy and promised to use `all means’ at its disposal to
keep the currency stable through 2015. Azeri President Ilham Aliyev
said last month that his country will continue to support the manat’s
value for `social’ reasons.
The manat gained 0.1 percent today to 0.7844 against the dollar,
according to data compiled by Bloomberg.
`Of all the regional currencies, I would expect the Azeri central bank
to value FX stability,’ Timothy Ash, the London-based chief economist
for emerging markets at Standard Bank Group Ltd., said by e-mail.
`Remember they held the manat even through the Lehman crisis.’