Our Analytics 4 february — 15:46

Elman Rustamov urged to abandon word 'devaluation' (Our comment)

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BY MAMMAD EFENDIYEV

Fear and panic are the most dangerous phenomena that sailors and pilots fear. Often, organisers of various rallies and owners of large shopping and entertainment centres, who are usually reminded of this after the tragedies, are also faced with this. The uncontrollable mass in a narrow space, frightened by some really terrible event, is ready to immediately sweep everything in its chaotic motion. This phenomenon is well known to special services officers, who can quickly make the only right decision even in the midst of the growing mass psychosis.

One does not want to discuss for a long time the well-known and sufficiently disclosed, including scientifically, mass phenomena that can lead to the most unexpected results. But lately, another danger has appeared in Azerbaijan, which is caused by mass panic. This danger is called devaluation, and the relevant authorities have not yet learned how to deal with it, although in terms of scale and mass character it could be put in the first place in the list of the most dangerous forms of panic. The devaluation panic is shaking the foundations of not only the monetary policy of the Central Bank, but also the entire economic policy of the country.

We encountered this for the first time in 2015, when, on the morning of February 21, an unexpected and incomprehensible message came like a bolt from the blue for all Azerbaijanis - manat was devalued. Recall what preceded this. The sharp decline in oil prices caused a great panic around the world, the exchanges were heating up to the limit, against the background of which speculative factors were given full play. Most of all, of course, suffered the oil-producing countries, especially if the oil in them was the main source of foreign currency earnings. Among them was Azerbaijan. True, the authorities of the country in every possible way tried to calm the people, urged not to give in to panic, assured that our foreign exchange reserves would be enough to cope with the trouble. In vain! The population rushed en masse to exchange offices, where billions of Azerbaijani manats turned into US dollars. The outbreak of panic began to pose a danger to statehood as a whole, which forced the authorities to take a decisive, though unpopular step.

But it was not possible to curb the panic even after the first devaluation. Neither the people nor the authorities had previously encountered the processes associated with devaluation, and they were not ready to fight this new phenomenon. Rather, financial institutions, including the Central Bank, worked tirelessly to stabilise the manat, but work with the population was not at the proper level. The rumours replicated by the media were more believed by the population than official information, and this was largely due to the mercantile interests of individual bank employees, who further fanned the panic that reigned in the country's financial market.

We will not talk about who started these rumours, inflated them - this is a separate topic, requiring the intervention of very different official structures. But we cannot by any means ignore the fact that rumours about the impending devaluation of the manat have recently begun to spread again. Appearing in the summer of last year, today these rumours are gaining an undesired scale. And again, the Chairman of the Central Bank, Elman Rustamov was forced to begin a meeting with journalists with the statement that there are no prerequisites for the growth of the dollar against the manat in Azerbaijan. He noted that it’s not serious to talk about the devaluation of the manat today, the macroeconomic situation in the country is stable, we have a surplus in the balance of payments. And oil quotes fluctuate at acceptable intervals.

Elman Rustamov

Perhaps, it was not by chance that after such a statement he made another important one - the Central Bank decided to reduce the discount rate by 0.5%, which once again indicates that there is no threat to the manat rate. Oil prices after the December recession increased by 20%, and, according to forecasts, the value of 'black gold' will fluctuate between 60-70 dollars. Much, of course, still depends on external factors, but serious measures are being taken to find a balance. And in conclusion, the country's chief banker asked journalists to use the word 'devaluation' less, instead of which he recommended the terms 'flexible rate', 'floating rate' and 'soft rate.'

Well, things, it seems, are better to be called by their names, without fear of the truth. And it's better to leave imagining softer and more digestible for society name to poets and writers. It does not befit the main banker, who is accustomed to operating with boring stencilled terms, which are also incomprehensible to many. But, apparently, Elman Rustamov himself is clearly aware of the danger of the ongoing panic tradition, which must be stopped before it leads to new misfortunes. And in the event of a possible misfortune, even the holy books allow to take mitigating steps and even tell untruth.

But the fact of the matter is that the main banker, who can count every step of the manat, feels powerless against panic. Although this is understandable, people are not money. Financial and economic experience of the main banker and his team allows you to professionally solve the tasks. But managing people, a panic situation is a completely different science and requires completely different calculations and abilities. And therefore he is looking for support from journalists, asking them not only to avoid the term 'devaluation' that evokes the public's fear, but also to place the emphasis correctly when preparing their information. Faced with the danger of confrontation manat-panic, he wants to attract to his side the large detachment of writing brethren. What effect it gives, time will tell...

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