Rise in Euro to Dollar not Good for Azerbaijan – Expert (video)
Azerbaijan, Baku / Trend / The rise in the euro's rate to the American dollar is not good for Azerbaijan, Trend 's expert, Ellada Khankishiyeva, said.
The auctions held in Europe on 12 September resulted in a new record drop of the USD rate compared to the euro (€1-$1.3903). For the first time in the history of the world's economy, the rate of the dollar dropped so much compared to euro.
According to Trend's expert, although the volume of dollars in the Azerbaijani economy is decreasing (for instance, deposits put to Azerbaijani banks in national currency increased 3.2 times this year, while the deposits put in foreign currency decreased by 29%), the dollar is still the following for Azerbaijan:
- the most liquid world currency,
- the main currency received from oil projects,
- the main foreign currency used in calculations of foreign trade operations,
- the currency with a rather wide internal currency market, and
- the currency in which salaries in most private companies are paid and consequently in which the most of the population saves its money.
Azerbaijan's export goods are traditionally estimated in USD in the world market.
"The situation, where almost only dollars are received in export operations, but at the same time one-fifth of imported goods go to Europe, is an obvious loss," the expert said.
According to the Azerbaijan State Statistics Committee, the majority of goods was exported in 2007 to Italy and Turkey. In the first half of 2007, goods valued at $480.6mln (19% of total export) was exported from Azerbaijan to Italy.
"A rise in the rate of the euro improves its role in Azerbaijan's internal currency market. But as the euro is not likely keep the same high level Azerbaijan's national currency may suffer. The prices for European goods are rising and that can stimulate inflation in the near future," she said.
On the whole, analysts forecast a further weakening of the USD position's in the world's financial markets. The exchange rate is expected to comprise €1 - $1.4 by the end of this year.