BAKU, Azerbaijan, April 1. Foreign currency sales at the auction of the Central Bank of Azerbaijan (CBA) have grown due to the realization of pent-up demand, Gulnara Khaidarshina, deputy head of Russian Gazprombank’s market analysis department, told Trend.
According to Khaidarshina, the current dynamics of foreign currency sales at auctions indicate that there is no increased demand from the population for foreign currency, despite increased external risks.
Besides, the dynamics is still determined by the schedule for financing budget expenditures in accordance with previously approved plans, including through a transfer from the budget, she said.
"The transfer to the state budget from the State Oil Fund of Azerbaijan (SOFAZ) for 2022 is planned at the level of 12.7 billion manat ($7.4 billion), or $7.5 billion (it will grow by 4.1 percent compared to the plan for last year),” the bank representative noted. “At the beginning of the year, Azerbaijan's budget expenditures are significantly lower than in the fourth quarter.”
“In the short term, there can remain some pressure on the volume of foreign currency sales at auctions from imports, which in value terms increased by nine percent last year to $11.7 billion. At the same time, the largest increase in import prices occurred in the fourth quarter of 2021 Khaidarshina also noted.
“This pressure can grow if the upward trend in global food prices which emerged in February strengthens under the pressure of rising prices for wheat and oil and fat products, as well as disruption of supply chains in connection with recent events,” she added.
The bank representative further noted that the foreign exchange sales on March 30, 2022, were 6.2 times lower than the highest level since the beginning of the COVID-19 pandemic recorded in March 2020 ($323.2 million).
"Azerbaijan has sufficient resources to maintain a stable exchange rate, being one of the CIS countries with the highest volume of international reserves,” Khaidarshina said.
As of March 1, Azerbaijan's international reserves, given SOFAZ assets and special drawing rights (SDRs) in the equivalent of $500 million received from the IMF last year, were estimated at over $53 billion and close to 100 percent of GDP (an estimate based on its growth by 5.6 percent last year), while covering 54 months of imports, concluded the bank representative.