Azerbaijan, Baku, Feb. 9 / Trend , I.Khalilova/
On the backdrop of the global financial crisis, CIS countries have faced devaluation of national currencies. Belarus, Kazakhstan, Ukraine and Russia are among the victims in the forefront, although devaluation wave also covered Uzbekistan, Tajikistan and Kyrgyzstan.
Rate of manat has also been falling in Azerbaijan, but less quickly than in other CIS countries, where weakening of national currency is still significantly impacted by falling prices on oil, gas and other resources. On the backdrop of dropping prices on export and appreciation in the value of capital, a number of states are facing waste of foreign reserves and deterioration of economic competitiveness. CIS countries are not an exception. As a result, authorities of several countries were forced to devalue national currency.
Azerbaijani media outlets reported on acceleration of this process in Azerbaijan. Azerbaijan of Banks Association President Eldar Ismayilov said Azerbaijan would not experience major changes in exchange rate policy such as in Kazakhstan and Ukraine.
"Although manat is weakening, changes in the national currency rate against the U.S. dollar are slight. I think the National Bank of Azerbaijan (NBA) will do its utmost to prevent a substantial devaluation of manat," said Ismayilov.
Ismayilov said the economic structure of Azerbaijan is different from that of other countries. Economic development growth continues in Azerbaijan. Azerbaijan is maintaining its leadership position in terms of GDP. As a result of 2008, Azerbaijani GDP growth hit 10.8 percent, despite decreasing prices on oil and oil revenues. A 15.7-percent rise occurred in country's non-oil sector for the first time, compared to a 7-percent growth in GDP in oil sector.
Since the beginning of 2009, the value of Azerbaijani manat has weakened against the dollar by 0.8 percent. But the Belarusian authorities had to devalue their ruble by 20 percent. Until then, the country was using part of foreign reserves in order to maintain the national currency.
Sharp weakening of Kazakhstan's national currency from Feb. 4 was forced by need to maintain the current level of gold and foreign currency reserves and the competitiveness of domestic producers. Rate of tenge devalued by roughly 20-25 percent. By a decision of the National Bank of Kazakhstan, exchange rate will be about 150 tenge to one dollar, compared to former rate of 117-123 tenge to one dollar. Devaluation of tenge in Kazakhstan has led to a 20-30-percent rise in prices for goods, including food.
Tajikistan national currency somoni devaluated by 4.1 percent within a week and 10.5 percent within a month. Tajikistan said devaluation was caused by high demand for foreign currency intensified by the growth of the American dollar. In mean time, it was also attributable to the fact that dollar's sharp appreciation is ungrounded on the backdrop of Tajikistan's stabile macroeconomic indicators. Tajikistan's National Bank described fall in national currency's rate against dollar as artificial and warned people against buying currency with ungrounded high rate.
The rate of the Kyrgyz som against dollar dropped 7.5 percent on the cash currency market. However, the Kyrgyz National Bank displays calmness and possesses enough resources to ensure stability of national currency's rate. At the moment the National Bank intervenes with the inter-bank currency market in an effort to ease hesitations in the exchange rate and prevent speculative operations. The bank also provides commercial banks with dollars in cash in a bid to meet people's demand for foreign currency.
Ukrainian currency's devaluation took place earlier. In 2008, hryvnia's rate against the American dollar dropped 50 percent. Experts say the national currency depreciated due to worsening of balance of payments, outflow of non-residents, fall in volume of foreign investments and withdrawal of deposits from banks.
In August 2008, the Russian ruble depreciated 40 percent and 30 percent since November, the onset of active stage of devaluation. According to the Central Bank, the currency will not devalue any more on condition that oil prices will be above $30 per barrel. Otherwise, the Central Bank will further take action to save domestic economy.
Experts say dollar's resurgence against euro is due to fears that the situation in the Euro-zone will keep on worsening while the European Central Bank (ECB) cuts interest rates too slowly. On Feb. 5, the ECB left base interest rate unchanged at 3 percent. However, head of the bank Jean-Clod Triche announced that the bank can cut rate in March.
The ECB's reluctance to cut value of money sharply and quickly which is necessitated by the poor economic situation in the Euro-zone will decrease euro's rate to $1.15 in 2009, according to the RBS Greenwich Capital Markets analysts.
"Pressures on euro will persist for short-term and medium-term period," director of the RBS Currency Strategy Department Dustin Raid said while recommending investors to sell euro against dollar, Japanese yen and pound sterling. "Euro-zone macroeconomic indicators will fall while there is a record level of income between Germany's liabilities and bonds of Spain, Ireland and Greece.
For the U.S. administration considerable depreciation of national currency does not seem fundamentally justified action. America, which is the 'engine' of pull-out world economy from crisis stakes on investment attractiveness of its markets. The foreign experts say dollar keeps its medium-term potential of appreciation on the European market.
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