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Higher oil prices mitigate risks to Azerbaijan’s currency stability – Moody’s

Oil&Gas Materials 21 February 2022 10:54 (UTC +04:00)
Higher oil prices mitigate risks to Azerbaijan’s currency stability – Moody’s

BAKU, Azerbaijan, Feb.21

By Leman Zeynalova – Trend:

Higher oil prices mitigate risks to Azerbaijan’s currency stability, Camille Chautard, Moody's sovereign analyst and lead analyst for Azerbaijan, told Trend.

She noted that for Azerbaijan, the high oil prices will drive current account surpluses and support the manat.

“This, along with improvements in exchange rate management lately (leading to a de facto peg to the US dollar since 2018) mitigates risks to currency stability,” added Chautard.

The price of Azeri LT CIF Augusta, produced at the Azeri-Chirag-Deepwater Gunashli (ACG) field, grew by 29 cents on Feb. 18 compared to the previous price, settling at $97.89 per barrel. The price of Azeri LT FOB Ceyhan amounted to $97.04 per barrel, up by 17 cents as compared to the previous price.

The stable situation in the foreign exchange market of Azerbaijan reduces further devaluation expectations, Deputy Head of the Market Research Department at Russian Gazprombank Gulnara Khaidarshina told Trend.

According to her, Azerbaijan's manat is supported by high oil prices, which have been at their highest since September 2014.

She noted that Azerbaijan has sufficient resources to maintain a stable exchange rate, being one of the CIS countries with the most international reserves. As of February 1, 2022, Azerbaijan's international reserves (including SOFAZ assets and 2021's receipt of SDRs from the IMF in the equivalent of $0.5 billion) were estimated at more than $53 billion and were close to 100 percent of GDP (estimated value, taking into account its growth by 5.6 percent in 2021), while covering 54 months of imports.

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