“After the latest announcement by the Federal Reserve System (FED), the dollar strengthened again in the global currency markets. So, the FED intends to increase the interest rate more than expected. Even raising the rate to 6.0 percent in 2023 is not ruled out. The FED will meet again on 21-22 of this month. The desire of the FED to go for high rate increases is due to the fact that the economic indicators in the United States in the first months of this year are better than predicted.
Publika.az reports that this was done by the member of the Economic policy, industry and entrepreneurship committee of the Milli Majlis, economist Vugar Bayramov said.
He said that the euro is losing value compared to the US currency. Currently, 1 dollar costs less than 6 cents to buy 1 euro. According to the MP, volatility is observed in the global currency market.
How will the FED’s decisions affect the exchange rate of the manat?
V. Bayramov says that the strengthening of the dollar in global markets does not pass without at least a psychological effect on regional currencies:
“If the demand for dollars was low in the auctions organized by the Central Bank of Azerbaijan at the beginning of the year, the number of buyers of foreign currency is already increasing. The Central Bank sold 44.8 million dollars in auctions on March 7, 51.7 million on March 2, and 42.7 million on February 28. On the whole, in February, the re-emergence of demand for dollars was observed.”
The deputy noted that the main economic factors affecting the exchange rate of the manat are the volume of currency entering the country, as well as the amount of currency auctioned by the State Oil Fund:
“A significant part of the demand for currency is paid by the State Oil Fund. In this regard, the amount of funds auctioned by the Oil Fund is very important in meeting the demand for dollars. This, of course, is considered important in terms of the exchange rate of the manat. Considering that the exchange rates of national currencies of our partners in foreign countries are actually one of the economic factors.
Azerbaijan has not yet switched to a floating exchange rate regime. The Central Bank retains the ability to directly intervene in the process. Therefore, how the exchange rate of the manat will change in the next months will directly depend on the position of the Central Bank of Azerbaijan.”
Akkabai
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