Azerbaijan's reserves drop by nearly 3% in October

By bne IntelliNews November 12, 2015

The Central Bank of Azerbaijan (CBA) has reported that its currency reserves dropped by $209.6mn to $6.8bn in October.

In February, the regulator resorted to scrapping a four-year peg to the dollar in order to salvage its declining reserves, as maintaining the Azerbaijani currency, the manat, at its previous levels was unsustainable. This resulted in a steep depreciation of 25% on February 21, and an overall depreciation of 33% between February and November.

Since February, the manat has been relatively stable and maintained its value against an undisclosed basket of currencies that, experts estimate, include the dollar (78%), the euro (20%) and other currencies (2%). 

Meanwhile, the CBA's reserves continued to drop, from a high of $15.2bn in August 2014 to $6.8bn in November. Since January, the regulator has lost more than half of its reserves, or $6.9bn.

The CBA's quickly declining reserves point to the fact that sustaining the manat at its current exchange rate is costing Azerbaijan large amounts of foreign reserves. Officials like CBA Governor Elman Rustamov and Finance Minister Samir Sharifov have said that the CBA is mulling letting the currency float freely, which will most likely lead to another sharp devaluation of the national currency. 

Such statements are contributing to the declining trust in the manat, an increase in demand for dollars and a drop in lending activity.

Related Articles

Azerbaijan's IBA sees assets fall 29% y/y in 2017 after debt restructuring

The assets of the International Bank of Azerbaijan (IBA), the largest lender in the country, contracted by 28.9% y/y to AZN8.7bn ($5.1bn) in 2017, the state-controlled bank reported on January 10. ... ... more

Nakhchivanis meet Iranians to discuss widening energy trade

The speaker of parliament of the disputed Nakhchivan Autonomous Republic—a landlocked exclave of Azerbaijan—has met with Iran’s economy minister to voice readiness for the securing of more ... more

Iran rejects idea that a Caspian Sea settlement is in sight

Iran’s foreign ministry has rejected the suggestion that the five littoral states that share the shore of the Caspian Sea have largely agreed to delineate its maritime borders and settle their ... more