S&P predicts stability of national currency in Azerbaijan

Azerbaijan will retain the manat's de facto peg to the US dollar at AZN1.7 to $1, supported by the authorities' regular interventions in the foreign currency market, Report informs, citing the statement of S&P Global Ratings on the affirmation of long-term and short-term foreign and local currency sovereign credit ratings of Azerbaijan at the level of "BB+/B".

"Nevertheless, in our view, should hydrocarbon prices drop sharply and remain low for a prolonged period, the authorities could consider allowing the exchange rate to adjust. This would help avoid a substantial loss of foreign currency buffers similar to that experienced by the central bank in 2015," S&P said.

S$P expects that the Brent oil price will average $102 per barrel (/bbl) in 2022, $85/bbl in 2023, and $55/bbl in 2024-2025. In this regard, the agency predicts that the exchange rate of the manat will remain at the level of AZN1.7 to $1 until 2026.