CBA fully controls foreign exchange market in Azerbaijan
By Nigar Orujova
The Central Bank of Azerbaijan has reported on its ability to fully control the country’s domestic market and ensure the balance of the supply and demand.
“There have been no major changes in the manat exchange rate versus the US dollar,” the CBA told Trend on November 11.
At the same time, these changes are not related to the processes on the country’s foreign exchange market.
The dollar exchange rate versus the manat has been gradually increasing since early November 2015, which raised concerns among the population. For instance, the exchange rate was 1.0491 manat versus $1 on November 2, and reached 1.0504 manat on November 11.
The devaluation threshold, which was determined on February 21, was 1.05 manat to $1, a 34 percent reduction on that day.
“As the CBA conducts its exchange rate policy as part of the dual currency basket, including the dollar and euro, daily fluctuations in the euro and dollar rate on the international currency market partly influences the exchange rate of the manat,” the CBA explains.
The Central Bank noted the growth of the dollar exchange rate versus the euro, as recently observed on the global market.
“The reason is due to information about a possible increase in the rate by the US Federal Reserve,” the CBA said. “This information was spread amid the monetary expansion program offered by the European Central Bank. The rate of the manat versus the US dollar has slightly changed amid these processes.”
The CBA said that earlier, the opposite situation was observed: the dollar exchange rate versus the euro was reduced. As a result, the foreign currency exchange rate versus the manat decreased.
“The dollar exchange rate versus the manat decreased to 1.0469 manat on September 15,” the CBA said. “This corresponds to regular market processes.”
Regarding the currency exchange offices, the Central Bank stressed that the adherence of the exchangers to the currency legislation, including requirements for the rate set by the buying and selling of currency, is always controlled.
In first nine months of the year, 91 percent of the transactions on the Azerbaijani currency market were made in dollars, according to the CBA report.
“The sharp decline in oil prices, which began late last year, and a wave of devaluations that covered the main trading partners of Azerbaijan, has led to increased demands for foreign currency on the domestic market, especially on the dollar,” the report says.
Compared with the same period last year, the volume of transactions with dollars increased by 1.8 times, while with the euro it increased 2.1 times.
In general, compared to January-September 2014, the volume on the monetary market of Azerbaijan increased by 1.8 times.
Within nine months, the dollar turnover in the foreign exchange market of Azerbaijan amounted to $54,085 billion, and €5,040 billion.
Further, the volume of net cash foreign currency sold by banks to the public increased 61.7 percent in the first nine month of the year, compared to last year.
The report also details how the growth in demand for foreign currency mainly occurred in the first quarter of this year. Thus, 63 percent of all sales of the dollar occurred during the first quarter of the nine month period, and there was a 38 percent drop in euro transactions.
In January-September, the real effective rate of the manat fell by 15 percent, which was mainly due to a reduction in price of the nominal effective exchange rate of the manat to 12.1 percent.
However, as the report says, depreciation of the real effective exchange rate of the manat is a factor that has had a positive impact on the competitiveness of the non-oil sector and stimulates exports.
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Nigar Orujova is AzerNews’ staff journalist. Follow her on Twitter: @o_nigar
Follow us on Twitter: @AzerNewsAz