On Monday, December 21, Azerbaijan adopted a free floating currency regime, which prompted manat’s plunge to its lowest point in 20 years,
and other media outlets reported. According to the Central Bank’s statement, the currency free float aims to improve competitiveness amid “intensifying external economic shocks,” Bloomberg reported.
With the economy heavily reliant on hydrocarbons, Azerbaijan has been undergoing a serious economic shock caused by a 70 percent decrease in the crude oil price since June 2014. Two other former Soviet oil-rich countries, Russia and Kazakhstan, have already abandoned their currency peg as oil dropped to its lowest in a long time. Many analysts were expecting Azerbaijan to follow the suit and move to a free float. However, at that time, the Azerbaijani authorities questioned if the country needed another devaluation.
Today, the official rate of the manat against the US dollar and the euro dropped by almost half. One dollar is worth 1.5500 manats, and a euro equals 1.6850,
reported. The depreciated manat caused a shopping frenzy and anxiety among Azerbaijani citizens, who rush to purchase goods and products at the current prices.