Weekly economic review (May 26-29)
ADB: Two factors maintaining national currency stability in Azerbaijan
Azerbaijan should diversify the economy to avoid excessive depreciation of the national currency, Betty Wilkinson, Director of the Public Management, Financial Sector and Trade Division of the Central and West Asia Department of the Asian Development Bank, said.
"The diversification of the economy is essential if the country wants to avoid depreciating of the national currency," she said. "Improving of the human resource quality can also play the key role here. Both factors can help ensure the stability of both the economy and the national currency."
She said that the countries of the Caucasus and Central Asia have faced two challenges - the economic crisis in Russia and oil price fall.
"Each country solves the problems arising from these challenges in different ways," she said. "But many countries, both oil exporters and importers, have resorted to the devaluation of the national currency."
Wilkinson said that the country was also forced to hold devaluation due to the Azerbaijani economy's dependence on oil.
"The devaluation of the manat [the dollar rate increased by almost 34 percent - to 1.05 manat on February 21] is a necessary and logical action, given that all of Azerbaijan's neighboring countries passed through this process," she said. "We faced with the situations when the countries decided to retain the national currency rate at a certain level and continued to do this until their [gold and currency] reserves emptied."
Wilkinson said that regardless of the fact whether the country is greatly dependent on the repatriation of capital, as Kyrgyzstan and Uzbekistan, or on oil revenues [Turkmenistan, Azerbaijan and Kazakhstan], devaluation is required in certain circumstances.