S&P: Azerbaijan to keep manat rate stable in 2021

In 2021, Azerbaijan will retain the manat's de facto peg to the US dollar at 1.7 manats to $1, supported by the authorities' regular interventions in the foreign currency market.

Report informs citing an article of S&P Global Ratings on the sovereign ratings of Azerbaijan.

"Last year, the CBA's [Central Bank of Azerbaijan] scheduled and extraordinary foreign exchange auctions with the participation of SOFAZ [State Oil Fund of Azerbaijan] ensured sufficient supply of foreign exchange, and lower import bills during the April-May period reduced the demand for the hard currency," the S&P article reads.

In S&P's view, should hydrocarbon prices remain low for a prolonged period, the authorities could allow the exchange rate to adjust to avoid a similar substantial loss of foreign currency buffers as in 2015.

In the 2021 state budget, the oil price is set at the level of $40. Since the beginning of the year, the black gold's price has exceeded $50 per barrel on world markets. It ensures the flow of additional resources from the hydrocarbon exports to the state budget and the State Oil Fund.

In 2020, the State Oil Fund at foreign exchange auctions sold over $7.3 billion (10.7% more than 2019). In 2019, the Oil Fund sold $6.59 billion at foreign exchange auctions (2.1% more than 2018).