“But exchange rate adjustments are not risk free,” the agency noted in a message issued Dec. 21. “The manat`s fall will hurt the already fragile banking sector, which could crystallise contingent liabilities for the sovereign.”
“The sharp exchange rate adjustment eases the oil shock’s fiscal impact by boosting the local-currency value of oil revenues and a floating currency should help stabilise reserves,” believe the agency’s experts.
Fitch also said gross reserves fell around 18 percent in the first nine months of the year, partly through defending the currency following an earlier devaluation in February.
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