Central bank urges efficiency increase in exchange risk management
Changes in the Azerbaijani national currency compared to the U.S. dollar have not exceeded 1% during the last 15 years, the country's central bank, CBA, statement on the main directions of monetary and financial stability for 2013 said, Trend news agency reported.
"The stability of the Manat had a positive impact on macroeconomic and financial stability, it strengthened confidence in the national currency and reduced the dollarization level of the economy," the statement said.
The Central Bank conducted rate policy operations in 2012 within the regulated exchange rate regime. Supply exceeded demand in the foreign exchange market due to the large surplus of payment balance. The CBA conducted a currency intervention to the amount of $1.5 billion in these circumstances to prevent significant strengthening of the rate and the neutralization of the negative impact on the competitiveness of the non-oil sector in the current year.
"As a result, the Manat rate remained stable next to the U.S. Dollar between January and November and rose by 0.2%," the CBA said.
The real effective exchange rate of Manat in the non-oil sector during 11 months fell by 4.3%. "On the one hand, this occurred due to an acceptable level of maintenance on the Manat rate, on the other hand, because inflation was kept at a low level in relation to our trading partners," the statement said.
The Central Bank said that cheapening the real effective exchange rate will eventually become an important factor in improving the competitiveness of the non-oil sector.
"Changing the Manat rate in comparison to other currencies will depend on forces in the global foreign exchange market in 2013," the statement said. "The significance of the effective management of the exchange rate risk on the part of economic entities increases in these terms. The parameters of the exchange rate policy will be determined by taking into account the balance of payments, the causes of the financial stability of the banking sector and the protection of competitiveness of non-oil exports."
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