Baku, Azerbaijan, July 25
By Azad Hasanli – Trend:
The average annual exchange rate of the Azerbaijani manat against the US dollar will strengthen to 1.67 manats in 2022, the Russian rating agency ACRA predicted.
The agency noted in its new report on Azerbaijan that, the rate of the manat will remain stable, fluctuating between 1.72 - 1.67 manats in the period from 2018 to 2022.
"The devaluation of the manat and the subsequent shock inflation phenomena and disposable incomes of the people have completely "come to naught" at the turn of 2017-2018, but the question remains whether the regulator will be able to maintain the current flexible monetary regime with the assumption of interventions in order to minimize exchange rate fluctuations caused by non-fundamental factors," the report says.
On the one hand, analysts of ACRA point out that, the improvement of the external situation signals a decrease in tension on the balance of payments, which moved to a positive zone in 1Q2017 due to a reduction in payments on primary income and repatriation of investments. The basic forecast scenario of ACRA agency implies a stable positive account of current transactions at the level of 5-5.7 percent of GDP, formed by the prevalence of positive trade balance over negative primary income with neutral secondary income.
The threshold price level for Azeri Light to enter the positive zone is $45 per barrel of oil [currently, Azeri Light ranges between $70-75 per barrel].
The outlook of ACRE agency on the rate of the manat until 2022:
|
2018 |
2019 |
2020 |
2021 |
2022 |
|
|
AZN/USD |
1.71 |
1.72 |
1.71 |
1.69 |
1.67 |
|
AZN/EUR |
2.06 |
2.12 |
2.14 |
2.12 |
2.11 |
|
AZN/RUR |
34.12 |
34.16 |
34.90 |
35.78 |
36.03 |
On the other hand, analysts of the agency noted that, new significant fluctuations in the hydrocarbon market at the planned stable levels of oil production in Azerbaijan for the forecast period imply a "freeze" of the vulnerability of the national currency, and the balance of payments has risks of deterioration in the case of new foreign economic shocks.
According to the results of 1Q2018, about 89 percent of the country's exports consist of oil and gas exports, as well as exports of petroleum products.
"In general, due to the decline in inflation expectations, reduction in the intensity of price growth, filling of international reserves to the level of eight to nine months of total imports of the country [or up to $8.5 billion as of the end of 2022], the main expectation is a relatively stable exchange rate of the national currency with an exchange rate band of 1.66-1.73 manats against the US dollar, with the prospect of appreciation at the end of the forecast period to 1.66," the report says.
The official exchange rate as of July 25 is 1.7 AZN/USD.
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