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58. Fakhri Mammadov: Exchange Rate Stabılıty and the Development of Fınancıal System
59. in Azerbaıjan
60.
61.
from fixed exchange rate to the floating exchange rate as a response. But, government
can’t follow this floating exchange rate system because of the regulations. There are also
other reasons such as, population does not believe monetary authority official statements.
Limited access to the real and publicly available data, financial instability, and illegal
black market currency market are negative effects. They coupled with the ineffectiveness
of the implemented monetary and fiscal policies. In a long run market will determine high
exchange rate for US dollar as result of high discount rates. Currently exchange rate and
interest rate parity doesn’t hold almost for 2 years. Although CBAR pays high rates in
deposit auctions the current situation can’t prolong for a long term as with high deposit
rates CBAR should increase money supply in a long run. This will cause in 20-30% rise
in US dollar. In order to stop negative effects of this exchange rate system the CBAR
should gradually change the exchange rates. In a long terms government should increase
private sector and decrease the public sector participation in economy. This will lead to
collection of high taxes and reduction of government spending. As private sector is more
flexible to changes in economy, government will suffer less from exchange rates and will
decrease dependence from oil revenue.

REFERENCES
CBAR, 2016 “Statement of the Central Bank of the Republic of Azerbaijan on the
main directions of the monetary and financial stability policy for 2016”
CBAR, Official available currency, 2017
CESD, 2016 “National currency rate in Azerbaijan: is the stability sustainable?”
Fakhri Mammadov “Oil Price Fall: Pros and Cons for development of entrepreneurship in
Azerbaijan” Azərbaycan Dövlət İqtisad Universitetinin Elmi xəbərləri, Il 5, Cild 1,
Yanvar-Mart 2017
IMF, “World Economic Outlook, October 2017
OPEC, World Oil Outlook 2016, accessed: 26.12.2017, p.60
Gorkmaz Imanov “Estimation of the optimal size of financial depth in terms of
Macro-Stability” The Journal Of Economic Sciences: Theory and Practice,
V.76, # 1, 2019, pp. 20-33.
Ruslan Khankishiyev, 2017 “The Currency Market in Azerbaijan: Realities,
Volatility and Perspectives”
Turaj Musayev “ The Oil Boom In Azerbaijan and modeling economic growth in
post-oil era” The Journal Of Economic Sciences: Theory and Practice, V.76,
# 2, 2019, pp. 31-45
The Central Bank of the Republic of Azerbaijan, 2017
World Bank, “World Bank Commodities Price Forecast”, 2017

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