Baku, Azerbaijan, Nov. 3
By Maksim Tsurkov - Trend:
The transition from fixed to flexible exchange rate in Azerbaijan may be possible in four to five years, the Deputy Chairman of the Central Bank of Azerbaijan Khagani Abdullayev told Trend Nov. 3.
"Every country has its own specific regulation of the exchange rate," he said. "There are countries targeting money supply, and the countries that target interest rates, while the monetary policy in some countries is focused on targeting the exchange rate."
"It all depends on how high is the specific gravity of this anchor in the inflation management. In our conditions, the stable exchange rate of [Azerbaijani] manat is more appropriate," Abdullayev added.
He said with the development of financial and capital markets, and the banking sector's growth, it will be possible to revise the exchange rate regime.
"We will consider the transition to flexible exchange rate when the interest rate policy starts playing a key role in the management of monetary and loan policy transmission mechanism," Abdullayev said. "So far, we consider the issue as a medium-term issue, but this can happen in the next four to five years. In the meantime, we will work in the same mode with a fixed exchange rate peg to the dollar."
Abdullayev explained that this is more reliable exchange rate in terms of actual inflation.
He also said that consultations are continuing on this matter with the International Monetary Fund (IMF).
Earlier, the CBA requested technical assistance from the IMF to improve the monetary and exchange rate policy in Azerbaijan. The technical assistance was meant for transition to a more flexible regime of the national currency exchange rate.
The draft long-term strategy of Azerbaijan's economic development also included plans for transition to the regime of free floating exchange rate of the national currency amid the flexible exchange rate policy.
Meanwhile, the average annual change in the nominal exchange rate of the Azerbaijani national currency manat (AZN) is projected to be 1 percent.
The AZN rate against the USD consolidated by 0.013 percent compared with early 2014, while in the same period of last year, the exchange rate remained unchanged.
The official exchange rate on Nov. 3 is 0.7844 AZN/USD.
Edited by CN