Azernews.Az

By Gulgiz Dadashova

The Central Bank of Azerbaijan (CBA), whose strategic currency reserves form the country's strategic assets, has announced that the ratio of the strategic currency reserves to Azerbaijan's GDP in the third quarter was unchanged at close to 70 percent.

According to the CBA report on monetary policy, the currency reserve volume has increased by 7 percent since early 2013 or up $3.3 billion, to $49.4 billion. The volume of strategic currency reserves exceeds the external debt of Azerbaijan roughly by nine times.

Azerbaijan's strategic currency reserves allow the country to finance three-year imports of goods and services.

The CBA reports that high growth rate of the strategic currency reserves is a factor that reduces the sensitivity of the Azerbaijani economy to external crisis influences and forms a strong macroeconomic buffer.

In this period, the foreign exchange reserves managed by the CBA grew up by 13 percent to $13.3 billion, which is enough to finance nine-month imports of goods and services.
The growth of the country's strategic currency reserves continued and considerably exceeded the international norms of sufficiency.

The State Customs Committee reported that the foreign trade turnover of Azerbaijan amounted to $26.1 billion in the first nine months of 2013. The volume of export hit $18 billion.

The surplus of the trade balance in the first three quarters amounted to $ 10 billion.
Also high growth rates are noticed in exports of cotton fiber, vegetable oils, metal pipes, sugar and other products. At the same time, imports of beef, cement, wheat, machinery, tea and other products also increased, the report reads.

"In addition, a greater increase is expected in the level of self-sufficiency in most agricultural commodities and food products by the end of the year. In addition, the figure on some products will exceed 100 percent, which would mean turning the country into a net exporter," the report reads.

According to the CBA report, in addition to export, the dynamics of remittances and capital flows from abroad had an enhancing effect on the foreign exchange earnings.

The State Statistics Committee reported that the volume of foreign investments in the country's economy was $4.3 billion in the first nine months of 2013, an increase by more than 66 percent over the same period in 2012.

Meanwhile, the banks operating in the country increased lending to the economy by 20.8 percent in January-September 2013, while by 30 percent - year-on-year.

The banks issued loans worth 14,793.3 million manat, including 10,508.5 million (71.03 percent) in national currency and 4284, 8 million (28.97 percent) - in foreign currency.

Azerbaijan's manat keeps stability

According to the CBA report on monetary policy, the bank continued the policy on sterilization of currency to prevent a significant strengthening of the manat and thus neutralize the negative impact on the competitiveness of the domestic non-oil sector.

The bank has acquired over $1.67 billion on the foreign exchange market since the beginning of 2013 for this purpose.

This year, the CBA continued its exchange rate policy in the framework of bilateral targeting of the dollar/manat. Under the conditions of a large surplus in the country's balance of payments, supply in the currency market exceeded demand.

In January-September, the exchange rate of the manat against the U.S. dollar kept unchanged and consolidated by 0.06 per cent.

The stability of the national currency positively affected the sustainability of the financial sector. During the reporting period the manat consolidated in nominal and real terms with regards to the currencies of the UK, Turkey, Russia, Ukraine, Iran, Japan and Georgia.
Azerbaijan's manat also enjoys high public interest in the region.

CBA Deputy Chairman Khagani Abdullayev said earlier that Asian countries are interested in Azerbaijani manat as a currency for use in their transactions.

"This is the perspective put forward so far as idea. However, we need to prepare for that. Several Asian countries are interested in this," he said.

According to him, this perspective should not be treated as merely a technical issue, as this is a global issue.

"In the future, it is possible. But de facto Azerbaijani manat is used in trade with neighboring countries, particularly with some of the countries of Central Asia," Abdullayev said.

Business Confidence Index further improves

The CBA announced that the Business Confidence Index (BCI) in the country has further improved in the first nine months of 2013.

The BCI is an indicator designed to measure the degree of optimism on the state of the economy that business owners are expressing through their activities of investing and spending. The more confident business owners and managers feel about the economy, their companies, their jobs and incomes, the more likely they are to make investments and purchases.

The results of a CBA monitoring on the real sector of the economy note that reason for the BCI improvement was the growth of industrial production and sales in the trade. Also, the monitoring results show optimistic expectations for economic activity.

The BCI in the industry in the first nine months of 2013 was 13.6 percent, which increased by 1.9 percent compared to the same period in 2012.

In January to September, the BCI in trade also showed impressive growth as it increased by 5.2 percent up to 10.9 percent compared to the same period of 2012.

The CBA report further reads that there were positive expectations in the food industry, building materials, weaving and trading of furniture and household appliances in Azerbaijan. This also affected the reduction of stocks of unsold products. Overall, the results of the monitoring show a steady increase in the number of enterprises showing the growth of production and sales.

The CBA monitoring also shows optimistic expectations for economic growth in the country in 2013 compared to 2012.