Central Bank of Azerbaijan raised its key interest rate for fourth time this year to its highest level since 2008. The institution is trying to restore confidence in the currency after both depreciations in 2015. Central Bank of Azerbaijan increase the key interest rate from 9.5% to 15.0%, entering into force on September 14. The upper limit of the range of interest is increased to 18% and lower to 12%.
The country, which was the third largest exporter of oil in the former Soviet Union, is in a currency crisis after Azerbaijani manat lost about half its value against the dollar last year. Many banks have stopped sales of foreign currency in the past few weeks, as demand rose and currency continued to depreciate.
The Central Bank of Azerbaijan uses over 70% of its reserves to defend the currency last year before untie the exchange rate after the collapse of the oil market. The Azerbaijani Manat was the most depreciated currency in 2015, having lost half of its value against the dollar.
The currency is the second worst performance among the former Soviet republics quarter, lost 7% of its value against the dollar.