Azerbaijan, Baku, June 19 / Trend /
Ellada Khankishiyeva, Trend Analytical Centre Head
Throughout the month, the euro in Azerbaijan has been moving steadily downward, leaving behind a record bar in one manat for one euro. The lowest exchange rate for this period was recorded on June 1, when one euro was 0.9701 manat.
According to the Central Bank of Azerbaijan, as of June 19, the official exchange rate of manat compared to the euro was 0.9907 manat to one euro.
There are two reasons for this: first - growing concerns about the financial problems of Spain and the second - the uncertainty due to the formation of a new government in Greece. Both factors have a negative impact on investor confidence, which pulls down the EU's single currency.
As for its American counterpart, the official rate of manat compared to the dollar, set by the Central Bank, has remained stable for almost two weeks and is at 0.7858 manat to one U.S. dollar.
However, dollar which is stable in Azerbaijan also tends to fall on world stock markets. Thus, according to indicators of international stock exchanges, the U.S. dollar on Tuesday, declines compared to the euro and yen before the next meeting of the Federal Reserve System (FRS) on Wednesday and amid the fact that the leaders of the G20 are going to focus on solving financial problems in Europe. In particular, the expectations that at a meeting on Wednesday, the U.S. Federal Reserve may introduce new measures to stimulate the U.S. economy weaken the dollar.
In order to save its economy during the peak of the financial crisis, Western governments have resorted to the well-known recipe - the expansion of crediting at low interest rates. As a result of the "active monetary policy," the decline has slowed slightly, but at the cost of almost incessant devaluation of major currencies - the dollar and the euro. The movement of their exchange rates began to resemble race with one another. Sometimes one "runner" goes first, sometimes another. Previously, everything was clear: the dollar was unmoved as a rock, while the euro, yen, pound and other currencies fluctuated around it in different directions. But now that the "rock" has moved from a place, a traditional landmark was lost, and the mood of investors towards both currencies is reduced.
As a consequence, Azerbaijan observes now strengthening of the Azerbaijani manat compared to the world currencies. At the same time as a result of inadvertent strengthening of manat domestic economy may well lose from increased imports, which mostly will negatively affect the state of the local manufacturer engaged in the manufacturing industry.