Azerbaijan is planning to abandon its currency peg to the dollar as the oil price tumble strains its energy-dependent economy, the central bank governor has told the Financial Times.

“It is critical to make some kind of corrections to fiscal and monetary policy,” Elman Rustamov, who has led Azerbaijan’s central bank for two decades, said in an interview. “We consider we should transit to a more flexible exchange rate regime and gradually we will transit to an inflation-targeting regime.”

The plan to drop the dollar peg is a big policy shift for Azerbaijan, which prizes economic and political stability but has been shaken by the 47 per cent drop in oil prices since June. Oil and gas accounts for 95 per cent of exports and 70 per cent of government revenues.