The Central Bank of Azerbaijan (CBA) conducted sterilization of currency in the amount of $967 million in the first half of 2014 in order to prevent a significant strengthening of manat, and thereby eliminating the negative impact on the competitiveness of the non-oil sector.
This is stated in the report of the Central Bank on monetary policy on the results for January-June this year.
"With the balance of payments in the currency market supply exceeding demand thereby strengthens the national currency. The central bank continued the exchange rate policy within the framework of bilateral targeting of dollar / manat in order to ensure a balance between supply and demand", the report says.
Since the beginning of the year the rate of manat against the dollar has not changed, entrenching by 0.03 percent. The dynamics of the nominal bilateral exchange rate of manat affected the changes in the real bilateral exchange rate, said the report.
During the reporting period the bilateral nominal and real exchange rate of manat strengthened compared to the national currency of Ukraine, Georgia, Kazakhstan, China and Switzerland, and cheapened in comparison with the euro area, the United States, Turkey, Russia, Iran, Japan, Israel, Belarus, the South Korea.
In the first half year the nominal effective exchange rate (NER) of manat in the non-oil sector in the total turnover rose by 5.1 per cent. According to the model estimations, the strengthening of the NER by one percent leads to lowering of prices by 0.28 percentage points.
"The difference in consumer prices has made a downward impact on the real effective exchange rate. As a result, non-oil sector REC in January-June rose by 0.1 per cent," - said in a report.
Edited by CN