Positive on the background of negative in drop in usd rates

Over the last time, drop is observed in prices of dollar at world stock exchanges. Many forecasts testify that a tendency on decrease of USD rates will continue increasing. According to last data, in March 2007 the Baku Interbank Stock Exchange (BICEX) rate of Azerbaijani manat in respect dollar increased 0.2% from 0,8688 AZN per USD to 0,8671 AZN per $1. As a result, in March the average sustained exchange rate of the national currency with respect to dollar was 0,8679 AZN per $1, whereas in February this figure was 0,8697 AZN per $1. Over the last year, the exchange rate of manat with respect to dollar increased 4.62%.

Fall in USD rates are caused by different reasons. One of them is speculation around probability of US attacks on Iran. If war is broken out in Iran, it is sure to lead to sharp increase of non production expenses by the United States, and consequently give birth to inflation and further cut in USD rates with respect to other currencies. It is necessary to note that not the war, the expectations for it affect the rates and it is probable to cause drop in rates.

Drop in USD rates in Azerbaijan means rise in the rates of manats and the process is probable to have a negative impact on the state of economy. Rise in manat will cause inflow of foreign capital, cash currency and of course, additional inflation pressures. The process on drop in rates of USD with respect to AZN is a negative factor for the production as well. At the same time it negatively impacts on export. Azerbaijani producers will feel constant pressures on competitive ability. It actually benefits the companies, which are involved in import of goods products manufactured abroad. However, measures taken for the consolidation of manat might lead to closing down of enterprises, involved exporting goods abroad and unemployment.

Devaluation of dollar will affect on other markets. Thus, demand for metal (including precious metal, crude oil, raw agriculture products, which is traded in dollars, will increase due to drop in USD. Price of oil in euro or pounds, will drop even of oil increases in dollars. It is one of reasons for rehabilitation of rise in gold, silver and oil prices over the last period.

Experts note that two manifestations - drop in dollar and rise in oil prices are interrelated indirectly, of course, through Iran. Possibility of armed attacks on Iran gives birth to inflation expectations from rise in non-production expenses by the United States and simultaneously affect on oil prices, defined by futures deals. So, deals are done today, but for further period. The futures deals are rather dependant on efficiency of the expected developments. So, the deals on oil take into consideration world expectations around the oil producing countries. Therefore, expectations on US armed attacks against Iran have direct impact on increase of oil prices.

Dollar is one of hard currencies throughout the world. Fall in its rate certainly influences on world prices. However, rise in oil prices is not a direct result of drop in dollar rates. Future increase of prices of 'black gold' is linked with exhausting, but not unrecoverable energy sources. So, rise in demand in oil and drop in its reserves actually cause rise in oil prices. Therefore, increase of oil prices is a long-term tendency. Unless global changes occur in energy production technologies, oil prices will continue increasing.

Drop in USD rates cannot affect on Azerbaijan's currency reserves, because these reserves are kept in euro and dollar. Furthermore, major part of reserves is kept in other currencies. When a country keeps its currency reserves not in one currency but in several, it cuts the possibility of benefiting on exchange rates.

At the same time, there is a probability of loss as a result of sharp drop of dollar. Thus, losing in dollar we actually win in euro, because dollar falls in respect to euro.

The banks' depositors are both physical and legal persons were also adapted in this situation. People's interests were accompanied with an increase of confidence in the national currency. Special weight of savings and deposits reduced by 17.9% in foreign currency in the general structure of the deposit portfolio in 2007. These processes are characterized by the consolidation of rate of manat with respect to the hard currency and as of 1 March 2007, urgent deposits and savings rose 5 times, while long-term savings by 4.4 times. The manat cash money (М0) increased 2.7 times and respectively, special weight f М0 in money mass dropped from 69.1% at the beginning of the year to 61.9%.

According to the National Bank of Azerbaijan, as of 1 March As of 1 March 2007 the banks raised 2,656mln manats (including 1,308mln AZN in national currency and 1347.5mln in hard currency) against 2493.4mln manats (including 1,203mln manats in national currency and 1290.4mln AZN in hard currency) as 1 February 2007 and 2,362,7mln manats in credits (including 1,170,5mln manats in national currency and 1,192,2mln manats in hard currency) as of 1 January 2007.

Overdue credits and loans comprised 130.1mln manats against 104.1mln manats as of 1 February 2007.

According to experts, the consolidation of manat will continue. Meanwhile, additional consolidation of the national currency at the present favors the government. Major part of country's debts is in dollars and therefore, cut in the cost of currency cuts the sum of debts in this proportion.

Subscribe to Trend in Google News! Subscribe
Azerbaijan plays its role in global fight against anti-Semitism and support of multiculturalism - UN official
Azerbaijan plays its role in global fight against anti-Semitism and support of multiculturalism - UN official
Azerbaijan is unique Muslim country with large Jewish community - Israeli ambassador (PHOTO)
Azerbaijan is unique Muslim country with large Jewish community - Israeli ambassador (PHOTO)
Israel's Partner Comms gets fibre deal to connect East and West
Israel's Partner Comms gets fibre deal to connect East and West
Loading Bars
UNIDO to offer expertise for Turkmen energy sector
Central Bank of Azerbaijan names priorities for development of insurance sector
Our first president made huge contribution to strengthening of state - President Tokayev
Nur Otan party should be led by person who was nominated and supported by it in presidential election - Nazarbayev
CBA expects inflation to return to target range Azerbaijan in 2023
Devotion to interests of country has particular importance in politics - Kazakh president
Iran working on connecting of Gilan ports to national railway network
Share of electricity in Azerbaijan’s total exports down
Siraf Pars Port in Iran becomes country's major liquid gas exporter
Global food prices rise to highest level over past decade - FAO (Exclusive)
Decree regulating process of charity on part of big business to be issues in Kazakhstan
French 2021 economic growth strongest in 52 years at 7%
Kazakh-Russian copper deposit dev't project approved by Russia's Main Department of State Expertise
Azerbaijan reveals petroleum coke, oil bitumen exports
Buta Airways to resume flights to Mineralnye Vody in February
Turkmenistan sees decline in trade turnover with Azerbaijan
We'll return to issue of expediency of my further chairmanship in Nur Otan after some time - Tokayev
Representative body of Kazakhstan's Nur Otan party updated by 55%
Azerbaijan unveils volume of transactions via Apple Pay
Public councils created under Nur Otan party should become effective platform - Tokayev
Azerbaijani Central Bank not planning to create new legislative base to regulate digital banks
Central Bank discloses Azerbaijan's possible current account balance in 2022
Potential of Nur Otan party wasn't fully utilized at critical moment - Tokayev
Currency rate of Azerbaijani manat to be stable in 2022 - CBA
Military reforms, increasing of combat capability of troops to be priority in 2022 – Azerbaijan MoD
Dariga Nazarbayeva resigned from Kazakhstan Nur Otan party
Azerbaijan reveals Top 10 oil importers
Azerbaijani CBA forecasts increase in demand for foreign currency
Rothschild & Co eyes creation of special financial zones in Georgia
Azerbaijan increases share of natural gas in exports
Annual inflation to be above target range in Azerbaijan - CBA
Nur Otan Party needs to renew itself - Tokayev
Turkmen enterprise eyes to expand tomato production
Non-OPEC won’t return to pre-COVID levels of oil output
Azerbaijan defense minister expresses condolences to Pakistan
Additional barrels from OPEC+ back to market in 2022 to be less than headline figure
Azerbaijan continues restoration and construction work on its liberated lands
Kazakh president elected chairman of Nur Otan Party
Azerbaijani President Ilham Aliyev awards WCO Sec-Gen with 'Dostlug' order
Global oil demand to surpass pre-pandemic levels this year
Uzbekistan plans to implement new projects jointly with AIIB
After 20 years, privatisation programme in India off to 'Maharaja' start
Armenian troops open fire at Azerbaijani positions in direction of Tovuz district
No talks on currency swap deal between Azerbaijani, Turkish central banks - chairman
Azerbaijan reveals inflation rate for 2021
Buta Airways to start operating flights to Kharkiv in May and increase number of flights to Kiev
Georgia’s Rural Development Agency talks co-op with international agencies in 2022 (Exclusive)
Eni to develop innovative technology for use of CO2
New opportunities for cooperation arose in region after end of conflict between Armenia and Azerbaijan – President Ilham Aliyev
Azerbaijan developing mechanisms for financing business in liberated lands
Uzbekistan sees increase in volume of car exports
Central Bank of Azerbaijan increases interest rate
Integration of arable land at Azerbaijani liberated territories into national crop rotation to improve food security - FAO (Exclusive)
Ukrainian Ministry of Economy discloses trade turnover data with Azerbaijan
Azerbaijan Entrepreneurship Dev't Fund talks soft loans for 2022
Bank of Georgia allocates funds for local solar power plant construction
Turkmen agriculture ministry opens tender to purchase plant protection chemicals
Uzbekistan to reduce methane emissions
Azerbaijan eyes turning local payment system into neo-bank
Uzbekneftegaz JSC, Tatneft PJSC discuss implementation of investment projects
Azerbaijan Entrepreneurship Development Fund unveils volume of soft loans issued in 2021
Georgia shares data on number of plastic cards in circulation
Azerbaijani oil prices down
Kazakh-Chinese oil company extends tender to buy spares for pumps
Azerbaijani doctor discloses most effective way to protect against omicron variant of COVID-19
TCS world's second most valuable IT brand, Infy fastest growing
Azerbaijani President Ilham Aliyev holds videoconference meeting with WCO Sec-Gen (PHOTO/VIDEO)
Uzbekistan establishes export of agricultural products to Latvia
Swiss train manufacturer eyes building factory in Georgia
Azerbaijan launches Tableau program for analyzing indicators of import, export operations
Azerbaijan preparing action plan within "Peace for Culture" initiative - ministry
Turkmenistan proposes to include Turkmenbashi Port in INSTC
Azerbaijan, Georgia to conduct joint tourist trips
Robinhood posts $423 mln net loss, shares sink after hours
MOEX index up 1.23% at trade start
Toyota remains world's biggest car seller, widens lead on VW
Azerbaijani currency rates for January 28
Germany’s RBC Consulting eyes expanding co-op with Azerbaijani companies
Oil heads for sixth weekly gain amid supply concerns
India's gold demand to keep rising after big jump in 2021: WGC
Number of cyberattacks on Azerbaijani companies tripled in 2021 - Span Azerbaijan
Kyrgyzstan reports about 11 servicemen injured as result of conflict on border with Tajikistan
Australia drugs regulator approves COVID-19 boosters for 16- and 17-year-olds
We will solve everything through negotiations, peacefully - Kyrgyz president about conflict on border with Tajikistan
Croatian companies preliminary talks on investment opportunities in Azerbaijani liberated territories - ambassador (Interview) (PHOTO)
Iranian National Soccer Team wins its way into World Cup
Situation on Kyrgyz-Tajik section of state border is stable
Three more citizens of Kyrgyzstan injured as result of conflict on border
Turkey's daily COVID-19 caseload hits new high of 82,180
3 police officers shot in U.S. Houston, suspect at large
Brazil's top court subpoenas Bolsonaro in leaked documents case
Morocco extends health emergency state until Feb. 28
Kyrgyzstan and Tajikistan agree on ceasefire and military withdrawal from border
N.Korea confirms latest weapons tests
Kyrgyzstan evacuates 1,470 residents from villages bordering Tajikistan
Jordan says 27 drug smugglers killed at border with Syria
Turkish 'kindness train' departs for Afghanistan with 748 tons of aid
Representatives of Kyrgyzstan and Tajikistan hold meeting on incident at border
EMA conditionally approves Pfizer's COVID-19 pill
Georgia – Uzbekistan trade turnover up
All news