Real effective exchange rate of Azerbaijani manat shrinks

Baku. 9 August. REPORT.AZ/ Real effective currency rate of Azerbaijani manat was 93.1 by July 1, 2017. 

Report informs referring to the Central Bank of Azerbaijan (CBA), this is by 1.5 points lower than the same indicator on June 1. The real effective rate rose by 1.4 points comparing to the same period of last year.

The reason why real effective currency rate remained constant is the national currencies of the major trading partners of Azerbaijan - Turkish lira, Russian ruble and Chinese yuan - have not shown significant change in dollar terms. This trend is expected to continue until the end of 2017.

Notably, real effective exchange rate of Azerbaijani manat is calculated since 2000; its lowest rate was 74.2 in 2004, the highest - 153.1 in 2015. The lowest reported rate after beginning of financial crisis was 87 on September 1, 2016.

Notably, real effective exchange rate measures the value of a currency against a basket of other currencies; it takes into account changes in relative prices and shows what can actually be bought. An increase in REER implies that exports become more expensive and imports become cheaper; therefore, an increase indicates a loss in trade competitiveness.

Analytical Group of Report believes, exchange rate of manat at 85-90 points level is satisfactory.