Baku, Azerbaijan, June 16
By Azad Hasanli - Trend:
Currently there is no reason for another devaluation in Azerbaijan, Head of the Baku office of the World Bank (WB), Larisa Leshchenko told Trend June 16.
"The current situation is unpredictable and difficult, however, I see no reason for devaluation," said Leshchenko.
There were two devaluations in Azerbaijan in 2015 - in February and December.
The Central Bank of Azerbaijan devaluated the manat on Feb. 21, as a result of which the exchange rate of manat dropped by almost 34 percent and stood at 1.05 manats per US dollar.
The CBA switched to the floating rate of manat on Dec. 21, as a result of which the exchange rate of dollar and euro increased by 47.6 percent and 47.9 percent, and stood at 1.55 manats and 1.685 manats, respectively. As a result, manat's rate against the US dollar dropped by 97.6 percent throughout 2015.
Instability of the manat has led to the fact that the population began to convert its savings into foreign currency. As a result, dollarization of deposits of the population increased from 40 percent in January 2015 to 85 percent in late 2015, according to the Central Bank of Azerbaijan.
Despite the fact that since early 2016 dollarization level decreased slightly - to 82 percent in April 2016, it still remains relatively high.
Leshchenko added that the residents of Azerbaijan got accustomed to the fact that the exchange rate of manat remained stable for a long time, so it didn't matter for them in what currency to keep their money.
"When such events as the devaluation occur, especially the sharp ones, it is a big challenge for people," she said. "The population feels insecure and wants to convert its money into dollars as a more stable currency."
Leshchenko considers it necessary for the population to diversify their savings in order to be more secure during the devaluation.
"If people have a variety of tools, where they can invest their savings, for example, to buy an apartment, to put money in a pension or investment fund, they will have more confidence that they can protect their investments," Leshchenko said. "It is not worth putting all the eggs in one basket."
