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Manat's share in physical entities deposits jumps

25 August 2014 09:00 (UTC+04:00)
Manat's share in physical entities deposits jumps

By Aynur Jafarova

Azerbaijan has witnessed a sharp rise in the share of manat in physical entities' deposits in recent years.

The Central Bank of Azerbaijan (CBA) has said as of July 1, the physical entities have placed their deposits worth 6.093 billion manats in the Azerbaijani banks, some 4.07 billion manats or 66.8 percent of which were made in national currency. Only 33.2 percent or 2.022 billion manats were placed in foreign currencies.

Also, around 62.5 percent of the population's funds were placed in the national currency, and over 2.522 billion manats in hard currency. The Azerbaijani population's deposits in the national currency in the banks have prevailed over those in foreign currency since 2012.

The situation in 2009 was a bit different. In 2009, the physical entities placed 2.15 billion manats of deposits in the Azerbaijani banks. Only 940.3 million manats or 43.73 percent of this amount was made in national currency, while 56.27 percent was made in foreign currencies.

The sharp increase of manat share in physical entities' deposits is associated with the growth of public confidence in the national currency.

The Azerbaijani government denominated the national currency in 2006 and began to pursue a policy to return the population's confidence in manat.

"Today one can say with confidence that the government has reached its goal. During the global financial crisis in 2009, many countries, including Kazakhstan, Russia and neighboring Georgia conducted the devaluation of their national currencies. Azerbaijan, namely the CBA risked and didn't conduct the devaluation of manat. This policy eventually proved itself, and the public confidence in manat increased," expert of the public association "Promoting Economic Initiatives" Samir Aliyev told local media.

He also said the changing rate of euro and dollar also shows manat's reliability.

"The rate of leading currencies is extremely unstable, stopping the population from placing their deposits in these currencies. The population prefer to place their money in a more stable and sustainable currency, such as the Azerbaijani manat. Meanwhile, the growth is observed not only in the proportion of deposits placed in manat. The proportion of manat in credit investments is increasing as well, which also speaks in favor of the growing confidence in the national currency," the expert noted.

Being one of Azerbaijan's state attributes manat was first put into circulation on August 15, 1992. The existing banknotes were determined under the Presidential decree 'on changing the nominal value and price scale (denomination) of banknotes of Azerbaijan' dated February 7, 2005.

Denomination of manat equated its course to the quotations of major world currencies, brought the safety and design of the national currency to the international standards, optimized exchange rate and price policy, and simplified accounting operations within the country.

New national currency carries more national and historical traditions. The design of 1, 5, 10, 20, 50 and 100-manat banknotes was developed based on a single concept. The main theme of the design of new banknotes is Azerbaijan's comprehensive development and independence, as well as its integration into Europe.

The CBA, in turn, supported the economic development of the country by fulfilling its mandate. In particular, the bank protects the macroeconomic stability, and ensures the development of the banking and payment systems in Azerbaijan. The CBA also successfully regulates money circulation within the country.

Macroeconomic stability paved the way for manat to become an attractive currency at the regional scale, and its accumulating and payment functions have strengthened. Today manat is the most valuable and stable currency in the South Caucasus region.

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