Volume of operations in currency markets increase

14 May 2019 10:32 (UTC+04:00)

By Leman Mammadova

Azerbaijan sees increase in transactions in the non-cash and cash currency markets during the first quarter of 2019, reads the monetary policy report of the Central Bank of Azerbaijan (CBA).

As noted in the report, the volume of transactions carried out in the non-cash foreign exchange market for the current period amounted to $6.1 billion. During the reporting period, 81.2 percent of transactions in the non-cash foreign exchange market have been carried out in U.S. dollars, and 18.8 percent - in other currencies.

The share of operations at the interbank foreign exchange market was 38.4 percent in the total non-cash transactions and 61.6 percent at the intrabank foreign exchange market.

In the first quarter of the current year, 54.9 percent of the operations in total dollar-denominated transactions at the interbank foreign exchange market were carried out in order to regulate the currency position of banks. The turnover of currency transactions are carried out mainly on the Bloomberg platform, according to the CBA report.

Meanwhile, foreign exchange transactions at the intrabank foreign exchange market amounted to $3.8 billion, of which 73 percent of transactions were carried out in U.S. dollars. Of the total number of all foreign exchange transactions at the intrabank foreign exchange market, 90.8 percent of transactions were carried out with legal entities.

The report also notes that the volume of transactions in the purchase and sale of cash foreign currency by banks amounted to $1.4 billion during the reporting period. Of these, 1.1 billion or 78.6 percent of operations accounted for dollar operations.

It should be noted that in 2018, the volume of transactions in the non-cash foreign exchange market amounted to $25.4 billion.

During the reporting period, 83.3 percent of transactions in the non-cash foreign exchange market were carried out in U.S. dollars, and 16.7 percent - in other currencies.

The share of operations at the interbank foreign exchange market was 33 percent and 67 percent at the intrabank foreign exchange market.

In 2018, 53.5 percent of transactions with U.S. dollar at the interbank foreign exchange market were associated with the regulation of the currency position of banks.

Last year, the volume of foreign exchange operations at intrabank foreign exchange market amounted to $17 billion, 77 percent of which accounted for transactions with U.S. dollar. At the same time, 93 percent of currency transactions accounted for transactions with legal entities.

The volume of transactions in the purchase and sale of cash in foreign currency by banks amounted to $7 billion for the reporting period. Of these, 5.4 billion or 77 percent of operations accounted for operations with U.S. dollar.

Since the beginning of 2019, Azerbaijan’s strategic currency reserves have grown by 4.1 percent, amounting to $46.6 billion.

It should be noted that Azerbaijan plans to simplify the process of issuing a license to open currency exchange points.

In December 2017, the Chamber of Supervision over Financial Markets prepared a new procedure for conducting currency exchange operations. In April 2017, the Parliament adopted amendments to the Law on Currency Regulation, which allowed individuals and legal entities to open currency exchange offices. In addition to the document, the Chamber also prepared a procedure for supervising the activities of currency exchange offices and an application form for obtaining a license to operate currency exchange offices.

Currently, currency exchange offices can operate only within banks. This prohibition was introduced in January 2016. Such a decision made by the CBA was explained by the need to effectively and efficiently regulate the operations of commercial banks, as well as to strengthen control over operations and optimize expenses.

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Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888

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