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Central Bank chief rules out national currency devaluation

29 October 2021 17:45 (UTC+04:00)
Central Bank chief rules out national currency devaluation

By Vugar Khalilov

Central Bank of Azerbaijan (CBA) Chief Elman Rustamov has ruled out the devaluation of the national currency, local media reported on October 29.

The foreign exchange market of Azerbaijan is stable, and the existing pressure on the manat (AZN) is gradually weakening, Elman Rustamov said at a press conference.

He added that the Central Bank will not make any decisions on the devaluation of the manat, since the existing pressure on the currency is gradually weakening.

Rustamov noted that the oil price will be set at $50 in Azerbaijan’s 2022 state budget.

It is expected that the revenues of the state budget in 2022 will amount to AZN 26.82 billion ($15.781 billion), a 5.4 percent growth compared to 2021.

However, the state budget expenditures are projected at AZN 29.89 billion ($15.822 billion), or 4.7 percent more than the expenses in 2021.

Earlier it was reported that the oil price in the state budget for 2021 amounted to $45.

Furthermore, Rustamov underlined that the Bank does not exclude a further increase in the discount rate.

In his words, the Board of the Central Bank has decided to increase the discount rate by 0.5 percentage points - from 6.5 to 7 percent.

Rustamov said that the upper limit of the discount rate level was 7.5 percentage points, and the lower one equaled to 8 percent.

"This decision was made on the basis of a forecast of short-term and medium-term inflation factors, taking into account the influence of increasing inflationary processes in the global economy, in particular, the increasing food and raw materials prices, transport and logistics costs in the national economy, as well as the processes of liberalization of regulated prices and tariffs amid growing balanced domestic demand," he stressed.

Rustamov underlined that "these factors weaken the neutralizing effect of monetary and fiscal policy, increasing the role of inflationary factors in the balance of risks to price stability".

"Preventing inflation from deviating from the target in the forecast horizon determines the exit of monetary policy from the pause phase," he added.

Further decisions on the parameters of the interest rate band will be made in line with the changes in the actual and forecast inflation indicators, the balance of risks, as well as the current state of the economy, and the prospects for its development in the medium term, the bank reported.

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