Azerbaijan's Central Bank (CBA) introduced new regulations for the functioning of exchange offices on January 7, most notably requiring those wanting to purchase more than $500 to show their IDs and restricting the amount of foreign currency that could be purchased to $500 per person a day.

The move comes amidst a frenzy to exchange local manats for foreign currency, particularly dollars, in Azerbaijan, after CBA floated the manat on December 21. The manat was devalued twice in 2015 - in February by 34% and in December by 48% - and observers fear that it could lose another 39% of its value against the dollar by the end of January.

CBA issued a statement on January 7 saying that all rumours about another devaluation were groundless. Like CBA, Kazakhstan's National Bank had been in a state of denial of another wave of devaluation after a 19% drop in the exchange rate of the tenge against the dollar in February 2014 but was finally forced to allow the Kazakh currency to float freely in August 2015, having burnt nearly $40bn in the meantime. CBA spent at least $8bn on propping up the manat in 2015.

Meanwhile, Kapital Bank, the country's second largest banks by assets, issued a statement on January 7 reassuring clients that its branches and ATMs were fully functional, after rumours spread that the bank was no longer selling foreign currency and that some of its ATMs were not issuing any currency at all.

Exchange offices and bank branches in Baku were reportedly taken by storm by customers wanting to exchange money, and some of the banks are no longer selling foreign currency. Meanwhile, banks are practising speculative exchange rates that are significantly higher than the one set by CBA.