Energy-rich Azerbaijan, whose economy has been hit hard by falling oil prices, withdrew support for its embattled currency today and the manat plunged by nearly a third against the dollar. 

"The central bank took the decision to switch to a floating exchange rate for the national currency as of December 21," the regulator said in a statement. 

It said the decision was taken because "falling oil prices and the continuing devaluation of partner countries' currencies has begun to negatively affect the Azerbaijani economy." 

Azerbaijan's manat was trading at 1.55 against the dollar today, down 32% from Friday. 

The country's central bank has spent more than half of its foreign currency reserves to support the currency, which has been in free fall since the beginning of the year.

Following the move, the bank's currency reserves increased by 3.1 billion manats (€2.7 billion).

Azerbaijan's decision came after the energy-rich Central Asian nation of Kazakhstan abandoned its currency band for a free-floating exchange earlier this year. 

Analysts said the move would not affect the Russian rouble but would negatively impact the majority of regional currencies.

Economists described the prospects for Kazakhstan's tenge as "slightly negative," adding that the Georgian lari - which has lost nearly 45% of its value against the dollar since November 2014 - is expected to be most affected. 

Energy exports constitute up to three quarters of Azerbaijan's state revenues, making the Caucasus country's economy highly dependent on global oil prices. 

The Caspian nation in February abandoned its dollar peg and switched to a dollar-and-euro basket and also devalued the manat by more than 33%. 

Oil prices extended losses today, with Brent at one point sinking 2.1% to $36.09 a barrel - its weakest since July 2004.