Azerbaijan

Azerbaijan's financial system is supervised by the Central Bank of Azerbaijan. Its currency history over the past decade is the most useful thing on this page for anyone who trades exchange rates.

Two devaluations in one year

The manat had been held stable against the dollar for years on the strength of oil revenues. When oil prices collapsed in 2014–15, the arrangement became unsustainable, and Azerbaijan devalued twice within a single year — in February and December 2015, the currency losing roughly a third and then a further large share of its value.

Households and businesses holding manat absorbed the loss; those holding dollars did not. Bank balance sheets were damaged by foreign currency lending to borrowers earning in manat, and a major bank subsequently restructured its external debt.

The sequence contains the whole lesson about defended exchange rates. The rate was stable right up until it was not, and the correction came in steps rather than in a drift. Anyone whose risk management assumed the previous years' volatility was a guide to the next year's was wrong by an enormous margin — which is exactly the failure mode of position sizing based on recent realised volatility in a managed currency.

Since then

The manat has been held at a fixed rate against the dollar since 2017, supported by oil and gas revenues and by the state oil fund's reserves. It has been stable for years, which is precisely the condition under which people stop pricing the risk.

Retail trading

There is no established domestic licensing framework for retail leveraged CFD brokers, so residents use foreign firms and the licensing jurisdiction's rules apply entirely. The central bank publishes warnings about unlicensed financial activity and has acted against unauthorised operators.

Cautions

Schemes promising fixed dollar returns are marketed persuasively in economies with a devaluation memory. A guaranteed percentage is not a trading result.