The National Bank of Azerbaijan (NBA) expects that the improvement of the rate of AZN to USD will be kept in 2007. Khagani Abdulayev, the Director of the Money Policy Department of NBA, informed Trend that in 2006, the manat improved its position to USD by 5,14% or from 0,9184 AZN in the beginning of 2006 to 0,8714 AZN by the end of 2006.
Starting from December 2006 and up to date, the rate has become more stable. That is first of all linked with the excess of the demand on USD to the supply due to the season when import operations are set up to increase.
The balance in the currency market is usually observed in December-January. Therefore, there are no economic grounds to continue reinforcing the rate, considers the representative of NBA.
In contradiction with Central Banks of other countries, where the fixed rate regime is applied, NBA keeps the regime of free and regulated rate. Therefore, in order to sustain the financial stability, NBA buys all excesses of currency at the currency market, if necessary, said Mr. Abdullayev. The same situation was in 2006, but the interference of NBA to the currency market was linked with the Banks buying excessive USD supply due to the country huge oil dollar revenues. The currency integral is put into the currency market for further convertation. In this regard, in 2006, NBA carried out the intervention of AZN at the amount of $1 bln.
According to Mr. Abdullayev, a part of the manat demand is usually covered by the currency market itself. More than a half of the State Budget consists of oil returns due to SOCAR tax allotment to the Budget. The main pressure on the currency market was the Oil Consortium VAT allotments, which was commenced in 2006.
Due to the maintenance of the rate stability, NBA covered the demand on manat through redemption of dollar supply excesses at the currency market. In addition to the State Budget, in 2006, SOFAZ (State Oil Fund of Azerbaijan) sold hundred million of dollars at the currency market, which was mainly covered by the market itself.
Taking into account the parameters of the State Budget 2007, the analogous volumes of the NGA intervention is expected to be this year as well. In order to make forecast for the rate of AZN to USD for 2007, the National Bank is still occupied with calculations.
The rate of USD to AZN in the forecast of State Budget 2007 was put at the rate of 0,86 AZN per 1 USD, while in 2006, the corresponding forecast envisaged 0,90 AZN per 1 USD.