S&P predicts stable exchange rate for Azerbaijani manat through 2028

S&P Global Ratings has projected Azerbaijan’s average annual inflation rate to decrease to 2% in 2024, a sharp decline from 8.8% in 2023.

Looking ahead, S&P expects inflation to rise to 4% in 2025, before slowing to 3% per year in 2026-2027, News.Az reports, citing the agency.

S&P also forecasts a reduction in Azerbaijan's current account surplus, which is expected to be 6.9% of GDP by the end of 2024, down from 11.5% in 2023. The surplus is anticipated to further decline to 2.7% of GDP in 2025, 1.2% in 2026, and turn into a deficit of 0.2% of GDP by 2027.

The agency believes that the Azerbaijani manat's exchange rate against the US dollar will remain unchanged until 2028.

"We forecast that Azerbaijan will maintain the manat's peg to the US dollar at 1.7 manat per 1 dollar, supported by regular interventions by the authorities in the foreign exchange market," S&P noted. However, if hydrocarbon prices fall sharply and remain low for an extended period, the agency assumes that the authorities will consider adjusting the exchange rate to protect the Central Bank's foreign exchange reserves from significant decline.

Azerbaijan's average annual inflation in January-October 2024 was 1.7%. Azerbaijan's Ministry of Economy forecasts the country's average annual inflation to be 2.7% in 2024, 4.6% in 2025, 4% in 2026, and 3.8% per year in 2027-2028.

News.Az