Azerbaijani manat’s devaluation to affect prices for imported goods (UPDATE 2)

Business Materials 21 December 2015 16:18 (UTC +04:00)
Azerbaijani government will make every effort to prevent the rise in food prices as a result of devaluation of the national currency.

Headline changed, details added (first version posted on 12:39)

Baku, Azerbaijan, Dec.21

By Anvar Mammadov - Trend:

Azerbaijani government will make every effort to prevent the rise in food prices as a result of devaluation of the national currency, Azerbaijani MP Rufat Guliyev told Trend Dec.21.

The Central Bank of Azerbaijan switched to the floating rate of the national currency (manat) from Dec.21, 2015.

As a result, the exchange rate of the US dollar and euro to manat rose by 47.6 percent and 47.9 percent and stood at 1.55 manats and 1.685 manats, respectively.

Today, it is difficult to say how the devaluation will affect the prices, he said.

The products manufactured on Azerbaijan's territory shouldn't rise in price, said the MP, adding that manat's devaluation can and will affect the imported goods.

The main task is to keep the prices for food products, housing services and transport, so that this situation wouldn't so strongly affect the population's welfare, according to Guliyev.

It will affect the inflation, price rise and the goods imported to the country, he added.

The MP said that the decision on devaluating Azerbaijani manat was a coercive measure and expected step explained with the decrease in the foreign exchange reserves of the Central Bank.

Naturally, the society hoped that it will be possible to avoid the devaluation, he said.

"But given that the Central Bank of Azerbaijan has lost hundreds of millions of manats in the currency intervention in recent 10-15 days, it would further lead to complete depletion of foreign exchange reserves," the MP added.

"The country was morally ready for this process, since we were aware that there is a psychological barrier for the oil prices - $40 per barrel," said the MP.

Guliyev pointed out that another reason for switching to the floating rate is the decision of the US Federal Reserve System to raise the interest rates from 0-0.25 percent to 0.25-0.5 percent per annum.

"It means that the capital from third countries will pour to the US market, which will cause pressure on the prices for primary goods - hydrocarbons, metals, coal and other goods," said the MP. "It also became the final straw."

In any case, there is no reason for agiotage, since the government will try to prevent all the negative processes which may be caused by the devaluation, according to Guliyev.

He noted that it is necessary to develop the small and medium-sized business, agriculture in order to ensure the consumption with domestic production.

"But on the other hand, there is an opportunity for expanding the export of our products," he said.

Today, due to the sanctions imposed on Russia, there is a shortage of European and Turkish products valued at around $70 billion on this country's market, said the MP.

"Our task is to quickly take the advantage of this situation and export our goods to Russia in order to make up for a part of the foreign currency revenues," said Guliyev.

Edited by SI


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