Azerbaijan’s manat plunges 47% after floating rate introduced

Azerbaijan's central bank adopted a floating rate for the manat currency on Monday, following similar steps by other ex-Soviet countries with economies hit by low oil prices, according to Reuters.

"The central bank has decided to switch to floating manat rate from Dec 21. Based on that, the manat rate will be determined by demand and offer on the forex market," the central bank said in a statement, Reuters reports.

The regulator set a manat rate of 1.55 per U.S. dollar on December 21, down 47.6% from December 18.

The central bank added that the decision was taken because of increasing external shocks, to ensure the balance of payments, preserve foreign currency reserves and to maintain the competitiveness of the national economy.

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Azerbaijan is one of several former Soviet republics that have been forced to devalue their currencies following a plunge in oil prices and Russia's rouble.

Oil and gas account for 95% of Azeri exports and 75% of government revenues, meaning the Caspian republic is particularly vulnerable to lower oil prices which have fallen more than 18% since the beginning of December.

Azerbaijan devalued the manat by 33.5% versus the dollar and 30% against the euro in February. It earlier abandoned the manat's dollar peg and adopted a dollar-euro basket to manage the exchange rate.