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Broad money supply reduces due to foreign assets in Azerbaijan

Business Materials 12 November 2015 20:20 (UTC +04:00)

Baku, Azerbaijan, Nov. 12

By Azad Hasanli - Trend:

The reduction in broad money supply (M3) in Azerbaijan is mainly connected with a decrease in net foreign assets, the Azerbaijani Central Bank's report on monetary policy as of January-September 2015 said.

"M3 rate has decreased by 3.88 billion manat or 18 percent up to 17.684 billion manat since early 2015," the report said. "Some 59.5 percent of 3.88 billion manat accounted for the net foreign assets."

As of October 1, 2015, some 68 percent of deposits were kept in foreign currency. At the same time, their share in M3 was 47 percent.

The processes on the currency market mainly affected the dynamics of changing the money supply structure during this period.

"The monetary base has decreased by 38.9 percent up to 7.050 billion manat since early 2015," the report said. "The level of dollarization affected the decline in the money supply, while other factors (such as market operations of the Central Bank, etc.) increased."

The level of the monetary multiplier, which expresses the ability of the banking system to create money, was not greatly changed.

The manat money supply (M2) declined by 46.3 percent up to 9.369 billion manat for the first nine months of 2015. This is mainly connected with a decrease in cash money.

Parameters of monetary market, in billion manat:

Jan. 1, 2014

Jan. 1, 2015

Jan. 1, 2015

Cash in manat (М0)

10 459

10 153

5 457

Money for transactions (М1)

12 737

12 830

7 189

Money mass on manat (М2)

16 435

17 436

9 369

Money mass in extensive understating (М3)

19 289

21 566

17 684

The official exchange rate is 1.503 AZN/USD Nov. 12.

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