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UPDATE 1-Azerbaijan plans to fully float its currency in 2017
December 12, 2016 / 1:43 PM / a year ago

UPDATE 1-Azerbaijan plans to fully float its currency in 2017

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BAKU, Dec 12 (Reuters) - Azerbaijan plans to fully float its currency, the manat, starting next year, the head of the country’s central bank told reporters on Monday.

Azerbaijan adopted a managed float earlier this year as the price of oil slumped, to ease pressure on its foreign exchange reserves.

That policy established a range within which banks could buy and sell manats of 4 percent on either side of its official rate . At times this year, it has suspended sales of foreign exchange.

The main reason for floating the currency now, said Elman Rustamov, the head of central bank, “is the achievement of macroeconomic stability.”

Foreign exchange trading had ended before Rustamov spoke. Even so, the manat traded at 1.7430 per dollar on Monday, a new low.

Some banks, where the rate stood at 1.85 per dollar, had halted or limited sales of hard currency to $100 per person in recent weeks, raising fears of another devaluation.

“Switching to full floating rate requires serious preparation, very tight macroeconomic coordination and solution of some structural problems,” Rustamov said. A concrete plan for the new policy will be submitted soon, he said.

The central bank has not been selling foreign currency on the market since February.

“There is a disproportion on the currency market now, when demand exceeds an offer,” Rustamov said.

The central bank raised its refinancing rate to 15 percent from 9.5 percent on Sept. 9. Azerbaijan’s current account deficit is expected to reach $5 billion by the end of 2016. (Reporting by Nailia Bagirova; writing by Maria Tsvetkova and Margarita Antidze; editing by Larry King)

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