Azerbaijan’s Manat Exchange Rate Forecast for 2026
Introduction to the Forecast
Azerbaijan will continue to maintain a stable exchange rate of the manat against the US dollar at the level of 1.7. This forecast has been released by S&P Global Ratings, which has published updated economic forecasts for Azerbaijan. The country’s ability to maintain this stable exchange rate is supported by regular currency interventions by the Central Bank and a strong reserve position.
Economic Factors Supporting the Forecast
The Central Bank’s foreign exchange reserves have reached $11.4 billion as of October 31, 2025, which is equivalent to four months of current payments. This creates a significant buffer against projected oil prices. However, the economy’s high dependence on hydrocarbon revenues means that a managed exchange rate adjustment in the long term cannot be ruled out if oil prices are low.
Impact on Inflation and Monetary Policy
The current exchange rate regime stabilizes inflation but limits the Central Bank’s ability to conduct monetary policy. This is an important consideration, as the Central Bank needs to balance the need for a stable exchange rate with the need to control inflation and manage the economy.
Dollarization and Its Effects
Deposit dollarization, which was 55% before the pandemic, has now decreased to 29%. This is due to higher interest rates on manat deposits and exchange rate stability. However, dollarization remains sensitive to confidence, and in case of currency pressure, the population may quickly switch to foreign currency.
Conclusion
In conclusion, Azerbaijan’s manat exchange rate is forecast to remain stable at 1.7 against the US dollar in 2026. This is supported by the Central Bank’s strong reserve position and regular currency interventions. However, the economy’s dependence on hydrocarbon revenues and the potential for dollarization mean that the Central Bank will need to carefully manage the exchange rate and monetary policy to maintain stability and control inflation. Overall, the forecast suggests a positive outlook for Azerbaijan’s economy, but also highlights the need for careful management and planning to ensure long-term stability.
