Baku, Azerbaijan, June 13 / Trend /
Leyla Abdullayeva, Trend analytical centre expert
Devaluation of the Russian ruble observed in the present could have an impact on the currency market in many CIS countries, including Azerbaijan.
For several months, the dynamics of the ruble is marked by weakening against the dollar. The European currency has also recently strengthened its position in the Russian market. Fearing a reduction of monetary incentive programs of the U.S. Federal Reserve, investors are fleeing from the commodity currencies, trying to insure risks. Negative dynamics of the ruble is also exacerbated by falling oil prices and a rise in the euro against the dollar.
Although the ruble is not the main reserve currency for Azerbaijan, it is ranked third in terms of popularity in the country due to the migration processes. According to the Federal Service for Labour and Employment of Russia, Azerbaijan ranks third behind Uzbekistan and Ukraine for the number of migrant workers in the Russian Federation, of which there are officially about 600,000.
The weakening of the ruble will be felt particularly by migrants' relatives, who live off remittances from Russia in their home country. Although, for the total volumes of remittances, Azerbaijan is only the sixth among the former Soviet republics, it is an absolute leader for the sum of a single transaction - an average of more than $600 per transfer. From now on, these funds will be received from Russia by families and friends of migrants at a rate that is much lower than previously.
Since the beginning of the year, Russian ruble has cheapened against the Azerbaijani manat by 6.6 percent. During the same period, according to statistics from the Central Bank of Azerbaijan, the sale of Russian rubles by the population totaled 71.897 million. In the same period last year, this figure amounted to 25.089 million rubles.
The Ministry of Economic Development of the Russian Federation among the reasons for the weakening of the ruble names sharp increase in imports and the outflow of capital from Russia. The fall of the ruble is explained by the removal of assets from the Russian economy, which leads to an increased demand for other currencies. At the same time, the cheap ruble will struggle with the slowdown of economic growth in Russia. It is known that the Central Bank of Russia has repeatedly resorted to measures to devaluate the ruble in order to protect the interests of local producers.
However, recovery of the rate of the Russian ruble in the foreign exchange markets is in the interests of Azerbaijan. The State Oil Fund of Azerbaijan (SOFAZ) in 2012 for the first time expanded the portfolio of foreign exchange exposure, which included the Russian ruble, along with the Australian dollar and the Turkish lira. Although, these currencies accounted for only five percent of the total foreign exchange portfolio of SOFAZ, losing money on them is not included in the plans of the fund.
On contrary, the State Oil Fund continued to work in this direction in 2013, having invested $500 million in the purchase of nearly three percent of shares of Bank VTB. The fund is aimed at further diversification of the investment portfolio, providing for investment in the Russian market as one of the priorities.