Tweet
Re: Energy in Azerbaijan
Sharp Decline in Azerbaijani Oil Income in January 2015
Sharp Decline in Azerbaijani Oil Income in January 2015
-
-
Re: Energy in Azerbaijan
Azerbaijan has spent another 8% of its foreign reserves defending its currency in January. That's in addition of the 8% that was spent in December. An overall decline of $4 billion, or 24% of all reserves, have been recorded since July.Originally posted by Mher View Post
Central Bank Lost its currency reserves by 8.0 % in January 2015
Caused by oil price decline in the world market, Central Bank’s intervention costs have decreased since August 2014 in Azerbaijan- Center for Economic and Social Development (CESD) reports. Central Bank Azerbaijan Republic’s (CBAR) currency reserves haven declined to $ 12.681 billion US since the world oil price dropped. CBAR’s currency reserves have decreased by around $ 4.0 billion US since oil price dropped.
Due to intervention costs, CBAR lost its currency reserves only by 8.0 % only during January, the first month of 2015. CESD underlines that CBAR has already stopped dollar sterilization due to decline in the country’s oil income. Alongside that, low oil price will push the CBAR to extend local currency sterilization in up-coming months of 2015.
Comment
-
Re: Energy in Azerbaijan
February 15, 2015 4:54 pm
Azerbaijan prepares to drop currency peg to dollar
Jack Farchy and Tony Barber in Baku
Azerbaijan is planning to abandon its currency peg to the dollar as the oil price tumble strains its energy-dependent economy, the central bank governor has told the Financial Times.
“It is critical to make some kind of corrections to fiscal and monetary policy,” Elman Rustamov, who has led Azerbaijan’s central bank for two decades, said in an interview in Baku. “We consider that we should transit to a more flexible exchange rate regime and gradually we will transit to an inflation-targeting regime.”
More
On this topic
Azerbaijan cautions against arming Ukraine
Azerbaijan probed over NGO crackdown
Special Report Azerbaijan and Turkey linked by energy and politics
Azerbaijan starts property spree in London
IN Global Economy
Oil and gas discoveries at 20-year low
Deep divisions laid bare at climate talks
Central banks act to stave off deflation
Riksbank cuts Sweden’s rates to negative
Sign up now
firstFT
FirstFT is our new essential daily email briefing of the best stories from across the web
The plan to drop the dollar peg is a key policy shift for Azerbaijan, which prizes economic and political stability but has been shaken by the 47 per cent drop in oil prices since June. Oil and gas account for 95 per cent of the country’s exports and 70 per cent of government revenues.
After a decade of rising prosperity that lifted nearly half of the Azerbaijani population out of poverty and fuelled a construction boom in Baku, the government will this year tap its $37bn oil fund for the first time since it was established in 1999.
“2015 is one of the most critical years [for the Azerbaijani economy],” said Mr Rustamov. “The key goal is to diversify the economy, to transit to a new economic growth model, and to decrease the resource dependency.”
He declined to say when Azerbaijan would abandon the dollar peg, but he emphasised that any weakening of the currency would be gradual rather than sudden, saying that the central bank would “take into account the interests of the population”.
The Azerbaijani manat has been effectively pegged to the US dollar at just over 0.78 manats per dollar since mid-2011, even as falling oil prices triggered sharp declines in other regional currencies such as the Russian rouble, Kazakh tenge and Georgian lari.
Last year, Russia allowed its currency to float freely, while Kazakhstan’s central bank governor told the FT in November that if oil prices remained low the Central Asian country would be forced to accelerate a move to inflation targeting.
Azerbaijan’s central bank is planning to drop the fixed dollar exchange rate in favour of targeting a euro-dollar basket, Mr Rustamov said, with a 20-30 per cent weighting for the euro in line with Azerbaijan’s trade. It would adopt a target for inflation of 5-7 per cent, compared with annual inflation of 1.4 per cent last year.
The central bank has spent “about $1bn” of its reserves since the start of the year to defend its currency, he added, as nervous depositors converted their savings into dollars.
Azerbaijan’s foreign exchange reserves of $52bn held by the oil fund and central bank are high relative to the size of its economy, at 70 per cent of gross domestic product, helping to shield it from the impact of the oil price fall.
Nonetheless, Mr Rustamov said that the effect on confidence had been stark, noting that the central bank was observing “a certain shrinkage” in the economy — compared with growth of 2.8 per cent last year.
The economy is heavily dependent on state investment, which is likely to fall this year as the government revises its budget, which was drawn up under an assumption of $90 oil.
Together with the shift in exchange rate policy, he said the central bank was working on a range of monetary measures to stimulate the Azerbaijani economy, including buying mortgage-backed bonds, supporting lending to small and medium-sized businesses, and direct support to the banking sector.
Comment
-
Re: Energy in Azerbaijan
EBRD revises Azerbaijan’s GDP growth rate
By Aynur Karimova
Azerbaijan’s GDP growth rate is forecasted at 1.5 percent in 2015, the European Bank for Reconstruction and Development’s report on regional economic prospects, published on January 19, said.
In its September report, EBRD predicted the country’s economic growth at 3 percent in the current year.
“Huge stocks of foreign exchange reserves at the Central Bank and the State Oil Fund of Azerbaijan will mitigate the impact of potential external shocks, however the growth of non-oil sector alone is unlikely to lead to the overall growth rate stability,” EBRD noted.
Meanwhile, the GDP growth rate of Azerbaijan is one of the highest ones in the Eastern Europe and Caucasus. For example, GDP growth rate of Armenia and Moldova is forecasted at zero percent, Belarus-1.5 percent, and Russia-4.8 percent.
Georgia, the economy of which has less dependence on Russia, will see economic growth rate at the level of 4.2 percent.
EBRD also predicts that 2015 will become a hard year for Eastern Europe and Caucasus region.
“The situation in the region countries will depend on the overall impact of the predicted negative economic growth in Russia, the geopolitical tensions in the region, structural constraints and recent currency fluctuations that will negatively affect the dynamics of trade operations and the dollarization of the banking sector and so on,” EBRD stressed.
The growth in the Eastern Europe and Caucasus region (excluding Ukraine) and Central Asia will slow down due to close economic ties with Russia.
“Stagnation is expected in Armenia and Moldova, and recession in Belarus. Decrease of prices for commodity will have a negative impact on the economy of Azerbaijan, Kazakhstan and Turkmenistan,” the bank’s experts believe.
The Asian Development Bank predicts Azerbaijan’s GDP growth at 3.5 percent, the International Monetary Fund-at 4.3 percent and the World Bank-at 4.1 percent in 2015.
Azerbaijan's Social-Economic Development Concept, developed by Economy and Industry Ministry, said the real GDP growth in the country will be 5.2 percent. This figure is predicted to reach 59.4 billion manats in 2015.
Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
Comment
-
Re: Energy in Azerbaijan
S&P outlook for Azerbaijan revised to Negative
Friday, 30 January 2015
Standard & Poor's Ratings Services revised its outlook on the Republic of Azerbaijan to negative from stable. At the same time, we affirmed the 'BBB-/A-3' long- and short-term sovereign credit ratings on Azerbaijan. The change is based on the view that the country’s fiscal and external balances will be hurt by the substantial drop in oil prices, though government debt levels remain very low.
The outlook revision reflects S&P’s view that Azerbaijan's government might draw down its currently substantial fiscal buffers or accumulate general government debt more rapidly than what we had previously expected in order to compensate for significantly lower oil prices. “We affirmed the ratings because Azerbaijan's strong external and government balance sheets continue to support the ratings,” says S&P.
The ratings are constrained by Azerbaijan's modest economic wealth levels, generally weak institutional and governance effectiveness, and limited monetary flexibility. Azerbaijan's economy and general government revenues depend on the hydrocarbons sector, which we estimate contributed about 44% of GDP and 95% of merchandise exports in 2013-2014. Since our last review, we have significantly lowered our expectations on oil prices for 2015-2018. “We now forecast that the oil price will decrease to $55/barrel in 2015 and will modestly recover to an average $75/barrel in 2016-2018. Deteriorating terms of trade will depress Azerbaijan's economic growth and hurt its external and fiscal balances,” says S&P.
Comment
-
Re: Energy in Azerbaijan
price of natural gas is down 33% over the past 3 months from around $4.50/MMBtu to $3.00/MMBtu.Last edited by Mher; 02-22-2015, 11:19 AM.Comment
-
Re: Energy in Azerbaijan
Oil-Exporter Azerbaijan Devalues Currency 33.5 Percent
BAKU, Azerbaijan — Feb 21, 2015,
Azerbaijan's Central Bank has suddenly devalued the country's currency by 33.5 percent against the dollar.
Like Russia, Azerbaijan has been hurt by the sharp decline in the price of oil, its main export. Russia's currency has lost more than half of its value in the past year.
In announcing the devaluation on Saturday, the Central Bank said it was aimed at "stimulating the diversification of Azerbaijan's economy, strengthening the international competitiveness of the economy and its export potential, and guaranteeing stability in the balance of payments."
The official rate for the manat was set at 1.05 to the dollar. The day before the rate was 0.7862 to the dollar.
The devaluation raised fears of a spike in inflation, especially on the consumer market, because it will make imports more expensive.Comment
-
Re: Energy in Azerbaijan
experts were expecting only 10%, and they went with 33%. That artificial sultanate is falling apart faster than most expected. We will enjoy watching that house burn down.Originally posted by Vrej1915 View PostComment
-
Re: Nagorno-Karabagh: Military Balance Between Armenia & Azerbaijan
The Central Bank of Azerbaijan (CBA) has abruptly devalued the country's currency against the dollar and the euro.
The official rate for the manat was set on February 21 at 1.05 to the dollar and 1.19 to the euro.
It means the manat lost 33.5 percent and 30 percent of its value against the U.S. and European currencies, respectively.
The CBA said the devaluation was aimed at "stimulating the diversification of Azerbaijan's economy, strengthening the international competitiveness of the economy and its export potential, and guaranteeing stability in the balance of payments."
Azerbaijan has been hurt by the sharp decline in the price of oil, the country's main export.
The devaluation raises fears of a spike in inflation because it will make imports more expensive.
The decision is also expected to sharply increase the domestic demand for dollars and euros.
Comment
-
Re: Nagorno-Karabagh: Military Balance Between Armenia & Azerbaijan
Azerbaijan’s Manat Devaluation Threatens Banks, Moody’s Says
(Bloomberg) -- Azerbaijan’s banks face risks to asset quality after the former Soviet Union’s third-largest oil producer devalued its currency, Moody’s Investors Service warned.
The central bank on Feb. 21 set the manat at 1.05 against the dollar, compared with 0.78 earlier. The move aims to strengthen “international competitiveness,” amid pressure on the the country’s finances from falling oil prices, the regulator said in a statement.
The economy of the former Soviet republic has slowed as oil prices fell 45 percent from last year’s peak while Russia’s plummeting ruble reduced the competitiveness of local industry and pushed peers such as Armenia and Kazakhstan to protect their currencies. Azerbaijan’s move is “credit negative” for banks such as the unit of VTB Bank OJSC and International Bank of Azerbaijan OJSC, Moody’s said in a statement Monday.
The step “pressures banks’ asset quality by weakening borrowers’ ability to repay loans, and inflates the size of banks’ foreign-currency-denominated liabilities,” Maria Malyukova, a Moscow-based analyst at Moody’s, said in an e-mailed report. The “devaluation will prompt customers to shift their manat deposits into foreign currency.”
Weaker Manat
The manat was 25 percent weaker versus Friday’s close at 1.03 per dollar by 6:33 p.m. in Baku, according to Bloomberg data, as the tightly regulated currency market opened after the weekend announcement. The devaluation follows a Feb. 16 decision to shift from a dollar-peg policy to tieing the manat to a basket, including the euro.
The yield on the nation’s $1.25 billion of 4.75 percent Eurobonds due March 2024 rose 2 basis points to 4.77 percent, climbing for a second day from the lowest close in almost three months. The rate peaked at 6.10 percent last month and set a low of 4.21 percent in October.
The central bank’s foreign reserves fell 11 percent to about $12.7 billion as of Jan. 31 from a year earlier, partly as it sought to protect the manat’s peg to the dollar. Standard & Poor’s lowered the outlook on Azerbaijan’s BBB- credit rating to negative on Jan. 30, citing the oil-price decline and pressure on the manat from “weaker terms of trade.”
Brent crude, the benchmark grade for more than half the world’s oil, has dropped about 45 percent since June last year. Azerbaijan produced the equivalent of 889,000 barrels a day of crude in January, the State Statistics Committee said Feb. 13.
Other former Soviet nations have also faced increased pressure on their currencies due to the decline in energy prices and as Russia’s economy slowed to the brink of recession.
Regional Moves
Georgia’s monetary authority raised its refinancing rate 50 basis points to 4.5 percent on Feb. 11 in response to what central bank Chairman Giorgi Kadagidze called increased inflationary expectations resulting from the weaker lari.
Armenia’s central bank has raised it’s refinancing rate 3.75 percentage points in two months to stem the dram’s 14 percent decline against the dollar in the past 12 months. Kazakhstan has resisted a large-scale devaluation this year after weakening the currency 19 percent a year ago.
The devaluation “heaps” pressure on the Kazakh tenge, Timothy Ash, the chief emerging-market economist at Standard Bank Group Ltd. in London, said by e-mail. “Armenia, Georgia and Azerbaijan have now all moved to try and set more competitive exchange rates in the wake of the ruble’s demise over the past year.”Politics is not about the pursuit of morality nor what's right or wrong
Its about self interest at personal and national level often at odds with the above.
Great politicians pursue the National interest and small politicians personal interestsComment
Comment