Azeri banks halt or curb FOREX sales as US dollar demand soars

Baku-Azerbaijan (Sept 5)  Some Azeri banks have halted on severely limited foreign currency sales as businesses and customers have sought to ditch the manat en masse, raising fearsof another painful devaluation in the Caucasus republic'scurrency.

On Monday, the manat traded at 1.6363 against the US dollar , its weakest since mid-March. On the black market, thedollar was being sold for two manats.

Out of six banks visited by a Reuters reporter in the Azericapital of Baku, three have halted forex sales and three havelimited them to up to $100 per person - far below the existing$500 cap imposed by the central bank.

"I have been selling chandeliers for 10 years," said AkifShukyurov, a Baku merchant. "I need to pay for supplies (indollars). And we sell in manatas and I cannot convert thecurrency because there are no dollars."

Increasing dollar demand in recent months has dented thecentral bank's efforts to restore faith in the manat after twodevaluations last year halved its value against the dollar andspurred unrest in Azerbaijan, a major oil and gas producer.

Slumping oil prices have also put pressure on the manat, asthree-quarters of Azeri state revenues come from energy.

The central bank said late in August that the higher dollardemand is seasonal, with firms needing to repay forex debt, andhas pledged to support Azeri banks and the manat. It has alsosaid forex sales from the SOFAZ wealth fund would continue aswell as central bank auctions. But auctions are held only twice weekly and are limited to$50 million, while demand has grown to 10 times that volume,according to central bank figures.

Central bank officials have been unavailable for comment.

Source: KitcoNews