BAKU: Azerbaijan’s central bank has sharply devalued the energy-rich country’s currency as falling oil prices and economic turmoil in Russia hit hard across the former Soviet Union.
The Azerbaijani manat lost 34 percent of its value against the dollar and 33.8 percent against the euro in the cut, with new exchange rates set at 1.05 manat and 1.195 manat respectively, the central bank said.
The move “aims at creating additional stimuli for economic diversification, boosting competitiveness and exports,” the regulator said in a statement.
With oil and gas accounting for 95 percent of the country’s exports and 70 percent of state revenues, the Azerbaijani economy has been under pressure from falling oil prices since June.
In December, the central bank spent some eight percent of its international reserves to defend the manat, and reportedly as much as $1 billion so far this year.
On Monday, the central bank moved to abandon its currency peg to the dollar in favor of a euro-dollar basket.
The central bank said that “the adjustment of the manat’s rate is also directed at neutralising negative effects from the devaluation of national currencies of Azerbaijan’s trading partners.”
The plunging value of the Russian ruble and falling oil prices affected the national currencies of many ex-Soviet countries.
The Georgian lari fell this week to its lowest level since 2004.
It has lost 22.4 percent of its value against the greenback since November — a consequence of shrinking remittances from Russia and declining exports.