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Has Azerbaijan's National Currency Run Away Scared?

The chief of Azerbaijan's national bank has become a figure of fun - and hatred. Widely shared.

The chief of Azerbaijan's national bank has become a figure of fun – and hatred. Widely shared.

Since independence Azerbaijan's kleptocratic Aliyev regime has chased away independent media, political opposition and civil society. Throughout all these repressions, only one thing stood firm by the ruling family's side as a symbol of the “stability” that President Ilham Aliyev, son of the country's first president, Heydar, never tires of boasting about on Twitter: the country's national currency, the manat.

Until recently, that is.

Unable to withstand the slumping oil prices that have struck the country's resource-based economy and the economic crisis across the Caspian in Russia, Azerbaijan’s Central Bank devalued Azerbaijan’s the manat by 33.5 percent to the dollar and by 30 percent to the euro last month.

Azerbaijan's manat — not to be confused with Turkmenistan's recently devalued currency of the same name — has been pegged to the dollar since 2011 but as crude prices dropped by more than 50% in the second half of last year changes were necessary.

While pro-government websites continued to write that ‘Azerbaijan is not afraid of $60 per barrel’, the manat was clearly afraid. Very afraid.

From “stability” to “guaranteeing stability in the balance of payments” 

The infographic shared by the Financial Times on December 23 shows the Azeri manat largely unchanged at the height of Russia's ruble crisis and with oil enduring its worst slump in years: 

Earlier in that same month, Aliyev had told journalists:

Oil prices have sharply decreased. Has anyone felt this in Azerbaijan? No, and no one will feel this because we have a powerful economic basis.

Similarly in January, President Aliyev boasted that foreign businesses would soon be changing their savings into manat and told his cabinet of ministers:  

The exchange rate of the manat remains stable. For several years, the rate of the manat has been not only stable, it has also increased in comparison with the major world currencies. We saw this in the past year as well. This is also a very positive indicator because the stability of the manat primarily favors the well-being and leads to an increased purchasing power of the population. The rate of the Azerbaijani manat is stable. This demonstrates the success of our economic policy again.

On February 21, however, the rarely fluctuating exchange rate of 0.78 manat to the dollar suddenly rose to a record high of 1.05, marking the biggest overnight devaluation of any country in the former Soviet Union since the ruble and crude oil took began their synchronised plunge. The public, many of whom have manat savings, was not informed.

Azerbaijan's Central Bank presented the devaluation in eco-speak as a necessary measure aimed at “stimulating the diversification of Azerbaijan’s economy, strengthening the international competitiveness of the economy, and its export potential and guaranteeing stability in the balance of payments.”

The fallout

This language is likely incomprehensible to most Azerbaijanis. What many do understand, however, is how devaluation has affected their lives. People have lost their savings. Pensioners, including this author's mother, have lost approximately 10% of their pension in real terms. Food prices are rising. Food shortages could be next as people look to hoard goods in a new atmosphere of economic uncertainty. People are rushing to buy dollars, if they can find any.

Aliyev, meanwhile has been awfully quiet since the shock devaluation. His legendary Twitter feed was silent on devaluation day.

But amid the quiet, the president was preparing a feel-good message: 

Better to laugh than cry

The manat devaluation sparked a viral hashtag on Twitter #manatadestek (support manat).

As Azerbaijani people have a talent for humour, the bulk of tweets are hilarious takes on the plight of the once treasured national currency.

The tweets reached a climax on Oscar night:

Fifty Shades of Manat

Tonight I expect Elman Rustemov [head of Azerbaijan's central bank] to win the award for best screenplay #Manatadestek

Others recalled a non-too distant tweet of President Aliyev’s:

The stability of manat serves people’s welfare, people’s purchasing power grows

And others suggested that they were switching their allegiance to another currency:

There. #manatadestek

Perhaps, having survived all those years of needless spending and mind-blowing corruption, the dear Manat has finally been frightened away.

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