National Bank of Azerbaijan to Prepare New Strategy for Currency Reserves Management

Business Materials 28 December 2007 16:22 (UTC +04:00)

Azerbaijan, Baku /corr. Trend I.Khalilova / The acceleration in the growth rates in the currency reserves in Azerbaijan in 2008, urges to increase the efficiency of their management. '2008 key directions of the money policy of the National Bank of Azerbaijan (NBA)' says that the strategy of managing the currency reserves will be determined in accordance with the new investment policy. The key components of this strategy are to diversify the reserves in the various currencies and decrease the dependence on one currency.

As a result of National Bank of Azerbaijan's sterilization of the currency proposals, the currency reserves increased by $1.4bln and exceeded $3.759bln. During the year, $150mln was gained from the management of the currency reserves.

Currently $270mln is under the management of three managers, Treasury of the World Bank, Swiss Bank UBS and US JP Morgan. Due to the inefficiency of the management, the NBA cancelled the contract with ABN Amro, the Dutch bank. The WB manages $110mln, UBS - $105mln, JP Morgan - $55mln.

As a result of decreasing the deficit of the movement of the capitals in 2008 due to the strengthening of the flow of the foreign investments into the non-oil sector, the strategic currency reserves of Azerbaijan will reach $19bln. Next year, the surplus of the current payment balance in the Country is expected to reach $14bln.

The strategic currency reserves are being formed from the currency reserves of the National Bank of Azerbaijan, State Oil Fund and currency reserves of the State Treasury.