Farhad Amirbekov: "Lack of dollars is the consequence of withdrawal of the oil economy model"

Azerbaijani banks have recently reported cancellations or increases of the sale limit of foreign currency to the population due to record dollar auctions conducted by the Central Bank and the State Oil Fund on Thursday. Together these structures sold $300 million per day to the commercial banks of the republic." Financial expert Farhad Amirbeyov told Vestnik Kavkaza about the reason for the problems with cash dollars in the country, as well as about what should be expected from the foreign exchange situation now.

- What has created the problems with the currency exchange in Azerbaijan, in your opinion?

- There was a violation of the functioning rhythm of the foreign exchange market. Its normal state provides for a continuous flow of currency into the market, the free flow of rate fixing and the ability to pay for imports and buy and sell cash.  Here there were some imbalances, the demand for foreign currency exceeded supply. In my opinion, the main reason is the restructuring of the economy from an oil model to a non-oil one. Azerbaijan is in a transformational phase, and the shortage of dollars caused by the reduction in revenue from exports of raw materials is the result of the fact that the republic is on the way to an independent oil price regime. Certainly it is unpleasant, but not catastrophic.

- Has the country managed to fully eliminate the imbalance, in your opinion?

 - I think that the high volume interventions by the State Oil Fund and the Central Bank should satisfy the current demand. You should note that there was no sudden increase in the rate of the dollar. Thus, it would be wrong to speak about a devaluation. Now it is just necessary to recover the structure of monetary circulation. In general, it is bad when deposits are mainly denominated in foreign currencies, rather than in the national currency, as it may lead to events such as last year's devaluation. It is desirable to create the necessary conditions to profitably maintain savings in manats. In addition, it would reduce the pressure on the foreign exchange market, making the situation more predictable on the financial markets.

Are new interventions possible by the Central Bank and SOFAR?

 - They are possible as one of the forms of market protection by the Central Bank against the attack of speculators. I hope that in the case of such necessity that this measure and others will be applied. In general, there is a fairly steady demand in Azerbaijan, which is formed by the state, companies and the population. There are investment flows (not only the export and import of capital), import services with large volumes. Exports exceeded imports in the country, but the commodity market structure is such that we have to purchase a lot abroad, despite the large reserves of import substitution. Since partial pressure on the market occurs from the dollar-manat currency pairing, it is necessary to intensify talks with our major trading partners about direct payments without using dollars. For example, with Russia. Why not trade with the help of a manat-ruble scheme? Or with Turkey? It would have a beneficial impact on the currency market.

- How should the population react?

  - The population should calm down and not panic. Because when a person takes a hasty decision he always loses. Certainly, commercial banks and the Central Bank should also create the necessary conditions under which the manat will be more profitable than the dollar. People should understand that they can earn instead of losing their savings. Rational behavior and thinking will prevail, and then we will see a change in the currency structure of deposits.