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No reasons for growth of foreign currency rate in Azerbaijan: NIKOIL Bank

16 April 2018 [17:15] - TODAY.AZ

By  Trend

There are no reasons for the growth of foreign currency rate in Azerbaijan, Jalal Nagiyev, adviser to the chairman of the board of Azerbaijan’s NIKOIL Bank, financial expert, told Trend.

He noted that there are no fundamental prerequisites for devaluation of Azerbaijani national currency, the manat, adding that the manat’s exchange rate against the US dollar has remained stable at 1.7 AZN/USD for a long time.

He said that a number of factors contribute to the manat’s stability. In particular, domestic production is growing in Azerbaijan, he noted.

“In particular, more entrepreneurs, especially representatives of small and medium-sized enterprises, started to apply for business loans aimed at creating or expanding production,” he said. “The measures undertaken by the Azerbaijani government - various benefits, increase of the number of industrial, IT and agricultural parks, as well as other measures also contribute to this.”

Secondly, more foreign currency enters Azerbaijan as the tourism sector develops, the expert noted.

“Only in the first quarter of this year, the number of tourists visiting Azerbaijan increased by 12.5 percent compared to the same period last year. This is while the growth exceeded 20 percent last year, according to Azerbaijan’s Ministry of Culture and Tourism,” he said.

“In addition, one shouldn’t forget about major gas projects that will provide additional inflow of foreign currency into Azerbaijan in the medium term,” he added. “The Trans-Anatolian Natural Gas Pipeline (TANAP) is expected to be launched this year and, accordingly, production within the second stage of the Shah Deniz field’s development is expected to start. This gas will be the base source for the Southern Gas Corridor.”

The expert mentioned extension of the Contract of the Century, as part of which Azerbaijan will receive foreign investments worth tens of billions of dollars, and additional $3.6 billion as a bonus.

Among other factors the expert also mentioned oil prices.

“Oil prices remain at $70 per barrel, although many international experts were more skeptical about this,” he said. “Azerbaijani oil recently renewed almost 3.5-year high, reaching $74 per barrel. These figures are much higher than the base oil price in the state budget [$45]. Therefore, it may be assumed that this year we will have no problems with budget execution. This is also a very positive factor when it comes to national currency.”

The trust of the Azerbaijani population to the national currency is also quite high and continues to grow, the expert added.

He stressed that the value of deposits in national currency in Azerbaijan’s banks amounted to 2.935 billion manats in February this year, which is twice more than in February 2017. The share of deposits in national currency for this year increased from 20.6 to 37.8 percent, he said.


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