Historical Sketch

During the Middle Ages, an Azeri state emerged around the city of Shirvan. In early 16th century it gradually fell under Persian suzerainty and was fully absorbed in 1538. The Russian expansion into the area culminated in the Russian-Persian War with the subsequent conquest of Azerbaijan. After the Russian Revolution of 1917, the territories of Transcaucasia proclaimed independence. There were rivalling movements for a united Transcaucasian state and separate governments in Armenia, Azerbaijan, and Georgia. In 1920, after the communist victory in the Russian civil war, Azerbaijan aligned with Soviet Russia, and in 1922, Russia and the three states of Ukraine, Belarus, and Transcaucasia formed the Union of Soviet Socialist Republics (USSR). In the Soviet territorial reform of 1936, Transcaucasia was partitioned again, and Azerbaijan became a separate Soviet republic. In 1991, Azerbaijan withdrew from the USSR and declared independence. The Nagorno Karabakh region with its Armenian speaking majority seceded immediately and proclaimed of the "Republic of Artsakh". The secession was finally crushed by Azerbaijan in 2023.

Monetary History Overview

In February 1918, the Transcaucasian government began issuing paper money and thus decoupled the region from the rest of the Russian currency area. However, the 1st Transcaucasian Ruble was subject to an even stronger inflation as the issuance of paper money soon went out of control. The city authorities of the capital Baku started to issue local emergency money in January 1918, the so-called "Baku Vouchers". In September, they officially became equal to the Transcaucasian currency and circulated throughout the country. The first Transcaucasian state collapsed at the end of 1918, and the individual states took over. The Azerbaijani government began issuing its own paper money in March 1919 replacing the Transcaucasian Ruble on par. The new Azerbaijani Ruble (Manat) was issued in such large quantities that the monetary economy almost collapsed. This continued even after the Bolshevik takeover in 1920. After the merger of Armenia, Azerbaijan and Georgia into the Transcaucasian Soviet Republic and the integration into the USSR, a currency reform was carried out in January 1923, which abolished the individual currencies of the three constituent states, creating the 2nd Transcaucasian Ruble. The conversion rates for the three currencies were different to take into account the economic situations. The Azerbaijani Ruble had depreciated considerably during individual statehood, much more than the Georgian but less than the Armenian. The uncontrolled issuance of paper money, however, continued during the Soviet Transcaucasian period such that the Transcaucasian currency depreciated further against the Russian currency. The uncontrolled issuance of paper money, however, continued during the Soviet Transcaucasian period such that the Transcaucasian currency depreciated against the Russian currency. When the Soviet Union finally introduced a stable currency in January 1924, the Transcaucasian Ruble had depreciated by a factor of 250 against the currencies of Soviet Russia, for Azerbaijan alone the factor amounted to 25'000. The currency reform in Transcaucasia was completed by mid-July 1924.

When Armenia Azerbaijan independence in 1991, the country initially remained in the Ruble zone. In August 1992, the 1st Azerbaijani Manat was created as national currency that circulated alongside the Soviet and Russian money. But when Russia withdrew the Soviet banknotes from circulation in mid-1993, Azerbaijan followed suit, and by end 1993, also Russian banknotes were demonetized, so that the Manat became sole legal tender. The peg to the Russian Ruble was severed, and after a short-lived peg to the US Dollar the exchange rate was floated in March 1994. The Manat plunged by more than 95% within a year but stabilized after 1995 due to the economic progress made. In early 2006, a currency reform was carried out by cutting denominations by a factor of 5000, and the 2nd Azerbaijani (New) Manat became the new national currency. The exchange rate was nominally variable but de facto kept on an artificial level. After a decade in 2015, the Manat was devalued twice by 55% in total. The operation was successful, and in March 2018, the Azerbaijani currency got pegged to the US Dollar.

Azerbaijan joined the International Monetary Fund (IMF) on 18.09.1992.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources