Azerbaijan, Baku, Jan. 11 / Trend I. Khalilova /
In 2010, the nominal rate of Azerbaijani national currency to the U.S. dollar strengthened by 0.6 percent, Deputy Chairman of the Azerbaijani Central Bank (CBA) Aftandil Babayev told Trend.
"The Central Bank ensured preserving the nominal rate of manat on a stable level. Therefore, the CBA made additional inflows to the foreign exchange market in the country, and the volumes of intervention exceeded $1 billion last year," Babayev said.
As of early 2010, the dollar rate compared to manat was 0.8029 manat, and on Dec. 31, 2009, it was 0.7979 manat.
The dollar rate's falling value on world currency market has an effect on the transmission mechanism of the formation rate in the country. Supply and demand are the main factors affecting the formation rate of manat-dollar in the domestic market.
In 2011, the CBA exchange rate policy will also be implemented, depending on the situation inside the country and the global climate. While carrying out the exchange rate policy, special attention will be paid to the inflation processes and the competitiveness of the country.
Meanwhile, CBA completely abandoned the use of dual currency (U.S. dollar-euro) basket while determining the exchange rate of manat. It moved to bilateral (manat-U.S. dollar) exchange rate from Jan. 10, 2011.
The CBA has realized the transition to maintain the value of manat by introducing the mechanism of two-currency basket comprising the U.S. dollar and euro since March 11, 2008.
Macroeconomic analyses demonstrate that USD-manat bilateral exchange rate target is in better harmony with the goals of Central Bank, particularly the target to affect inflation level under the current environment. This mechanism, along with being favorable from communication point of view, amplifies opportunities of the Central Bank to switch to floating exchange rate regime in a long run.
Many countries are now starting to actively stimulate export and economic growth by reducing the value of the national currency. However, the CBA considers it incorrect to link these measures with the exchange rate policy. It is possible to contribute to these processes through the exchange rate policy, with the policy pursued by the CBA in accordance with the structure of the economy, as it aims to expand exports and economic growth.