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CORRECTED-UPDATE 1-Azerbaijan's reserves plunge in August as props up manat
September 4, 2015 / 1:35 PM / 2 years ago

CORRECTED-UPDATE 1-Azerbaijan's reserves plunge in August as props up manat

(Corrects June to July in second paragraph)

BAKU, Sept 4 (Reuters) - Azerbaijan’s foreign currency reserves fell by more than $1 billion in August, illustrating the heavy pressure on its manat currency due to falling oil prices and global financial jitters.

Central bank data published on Friday showed the oil-rich Caucasus state’s reserves fell to $7.315 billion in August from $8.501 billion in July. This compares with a decline of just $18.7 million in July.

The bank’s reserves have almost halved from $13.7 billion at the end of 2014 as the central bank has intervened to support the manat.

“August 2015 was difficult from a financial point of view,” said a high-placed source at the central bank. “The economies of large countries of the world declined and the price of oil also fell on world markets, which influenced the state of the manat.”

“To avoid a fall of the manat the Central Bank of Azerbaijan increased interventions”.

Azerbaijan devalued the manat by 33.5 percent in February when it replaced a peg against the dollar with a managed rate against a dollar-euro basket.

The central bank sets the rate against the basket each day but seeks to prevent large rises or falls.

In April the head of the central bank said the country was moving towards a flexible exchange rate but wasn’t ready for one yet.

Last month Kazakhstan, another oil-rich ex-Soviet republic, floated its tenge currency, leading it to slide heavily. (Reporting by Nailia Bagirova; Writing by Jason Bush; Editing by Hugh Lawson)

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