FEB. 21 2015 (The Conway Bulletin) — Azerbaijan’s Central Bank slashed the value of its manat currency by a third overnight, a sudden move that took businesses and ordinary Azerbaijanis by surprise.
Previously Azerbaijani officials had said that they would release the manat from its dollar peg, suggesting only a gradual devaluation to adjust to a sharp decline in the Russian rouble.
They have now justified the sudden devaluation by saying that they had little choice but to act in the face of a collapse in oil prices and economic turbulence in Russia.
“This decision was made in order to support diversification of Azerbaijan’s economy, strengthen its international compatibility and export potential as well as to provide balance of payments sustainability,” the Central Bank said in a statement.
On the streets of Azerbaijan’s towns, though, the devaluation was less generously viewed.
Veli, 29, a small business owner in Guba, a northern city, told a Bulletin correspondent that he was in shock.
“I believed the government. I kept my savings in the manat,” he said. “I lost third of my savings. It’s painful. It’s theft by the government.”
He said that he had no choice but to increase the price of the electronic goods he was selling in his shop — fuelling rising inflation.
Sahiba, a mother of two young children living in the city of Gazakh on the western border with Georgia echoed these sentiments. Her husband is a government official but has had his pay cut already this year.
“We’ve got a mortgage,” she said. “I don’t know what we’ll do.”
ENDS
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(News report from Issue No. 220, published on Feb. 25 2015)