Rumours about an upcoming devaluation of the manat are unfounded, Azerbaijan's central bank said in a statement on August 22, APA news agency reports. The statement comes amidst mounting speculation that the currency is at risk of further depreciation after shortages of foreign currency in the country have led to the development of a black market.

Monetary instability has plagued Baku ever since February 2015, when declining oil revenues and pressure from falling currencies in Russia and Central Asia prompted the regulator to drop the peg to the dollar and enforce a controlled floating rate. Ever since, the Azerbaijani currency has seen a second major depreciation in December and has been gradually falling since May despite the regulator's efforts towards monetary tightening.

In its statement, the regulator explained that the rumours are "groundless" because the exchange rate depends on supply and demand on the currency market. However, it failed to address the fact that demand for dollars has been increasing. At a biweekly currency auction last week, banks demanded $700mn in foreign currency, but only received $50mn, Turan news agency reported.

Foreign currency has been in particular short supply since August 19, local media reports. According to Turan, those seeking to buy dollars are either turned down or offered small amounts of it at banks' branches. The government closed down all the currency exchange offices operating outside of banks in January.

Banks like Bank Respublika have stalled currency exchange operations altogether, while others - like Rabitabank - cap transactions at $200 per person, sources say. Other banks, like the local branch of Turkey's Yapi ve Kredi Bankasi, claimed that they were not restricting currency exchanges.

In February 2015, two days before the manat was floated, the chairman of the central bank Elman Rustamov sought to reassure Azerbaijanis that a devaluation would not occur, and called rumours about a possible weakening of the currency unfounded in an interview with local television station AzTV.