MANAT CLIMBS UP
Fall in rates of dollar causes panic among population in Azerbaijan. It still remains questionable what currency to prefer in keeping savings. An outstanding international financier, George Soros, predicts further fall in rates of US currency at the world exchanges. Besides, the financial urges that further fall in the crude prices in inevitable, which he explains with delay in the growth of the US economy.
Soros relates such development with a definite coolness in the US dwelling market, as well as intensified growth pace of inflation. The key reason causing weakness of dollar is unbalanced economy of the United States. It is worth to note the instability of the world financial system, based on one of the reserve currency dollar has been dealt too long. The analysts hint at the necessity of establishment of such system which would be based on several currency: such system will be imposed the different risks. This time the U.S. Committee on open market was guilty for current fall in the rate of U.S. dollar. It announced on the completion of a cycle of interest in its session.
Meanwhile, official rate of manat in regard to US dollar, set by the National Bank of Azerbaijan grew 0,001 point or 0.1%. Average rate was established as 0.89685 manats per 1 US dollar, Trend reports. maximum rate of US dollar in respect to manat was established on 12 June (0.8973 manats per 1 US dollar), minimum 16 June (0.8963 manats per US dollar)
Thus, since the beginning of the year the U.S. currency has reduced 0.02 manats. And it is not the final limitation. The population more and more loses trust in the dollar and prefer saving the private deposits in manats. Today manat is more profitable than dollar and euro. They people has no way, as the forecast promise further rise of manat. We can speak about its high reliability, manat will continue increasing in respect to dollar and euro. According to the National Bank of Azerbaijan, following the consolidation of the rates of national currency the deposits in manats rose 83% in January to February 2006, whereas the saving in the foreign currency only 21.3%.
The tendency observed with the consolidation of manat started from the first quarter of 2005 and as a result of last it comprised 6.4%. However, the process of consolidation of the national currency since the beginning of 2006 develops in slower rates tan the forecasts by the National Bank of Azerbaijan. Even in the beginning of the year we carried out the estimation of manat over a year and the current growth pace manat lags the forecasts, Elman Rustamov, the chairman of the Managing Board of the NBA, said. If to trace the dynamic in other oil producing countries, it comes out that the schedule of inflation in Kazakhstan and Russia, including the pace of consolidation of ruble and tenge in respect to dollar go on in more intensifies pace than Azerbaijan, he stressed.
We analyze the situation with the consolidation of nominal rate of manat, as well as in respect to rates of major foreign trade partners of the country. Over the past 5 months the level of inflation and rate of national currency have not led to worsening of indices of foreign trade relationships of the non-oil sector of Azerbaijan. The dynamic of growth pace of inflation in countries major foreign trade partners goes on in more rapid pace. Therefore, the efficient rate of manat did not increase, Rustamov underlined.
The local experts say drop in rate of dollar does not introduce anything serious. Drop in rate of US dollar has been a long ago. To be more correct, the inflow of revenues in dollar from the realization of export oil at world oil prices, which exceed the figure projected in the public budget, as well as the in-flow of foreign capital, invested in countrys major funds. Much capital entering the country in foreign currency, mainly in the US dollar, do not influence in the amount parameters of the domestic market, but rater promote the consolidation of rates of Azerbaijani manat in respect to the U.S. currency.
Moreover, rise in oil prices will not stop: $75100 per barrel this year is not regarded to be a fantastic this year. It means that Azerbaijani economy will receive oil dollars. So, manat will get consolidated, while dollar will fall.
The consolidation of the Azerbaijani manat can hurt the economy only in case of rise of inflation, Heydar Babayev, the Minister for Economic Development, assures. The consolidation of manat is one of anti-inflation measures taken by the NBA. He regarded the tendency of consolidation of manat as obvious amid rise in the inflow of dollar in the country. As to inflation, the governments try to take the promise in respect to maintenance of inflation in the single digit level as of the end of 2006.
Permanent fall in manat deprived our economy from an incentive of accumulation needed for investments. However, extreme consolidation of the national currency in respect to the U.S. dollar is bound to offer definite results for the Azerbaijani economy.
Strong consolidation of manat is unprofitable for Azerbaijan, it influences on the national production and do not meet the strategy on the development of the non-oil sector. The consolidation of manat reduces rivalry of our products abroad and makes difficult a task of doubling the GDP. Besides, a strong devaluation of national currency is also unprofitable, as it affect in the level of inflation. So, the mean is to ensure stability of manat.
Here it is necessary to note no less important factor which testifies for consolidation of manat it is an original promotion of the national currency. Until the commencement of the process of denomination of manats the first deputy chairman of the Managing Board of the National Bank of Azerbaijan, Alim Guliyev stated that after the issue of denominated manat to the circulation no one will pay attention to the dollar. It will be more comfortable to use the new manat in all terms. It will be of high quality and protected in high level. It will more expensive currency than US dollar.
However, the Azerbaijanis still are used to calculate all deals and prices in dollars, instead of respecting the authority of one of the major attributes of the statehood national currency as it is to be done by citizens of an independent country. Obviously, it is remnants of the period of perestroika, when manat was instable and only opportunity to get rid of too many zeros. It was prestigious to receive salary in dollar. Now, however, all has changed. Dollar drops and we are know jealous to those who receive wages in manats. Nevertheless, the big sums are still called in currency as a matter of habit.