Azerbaijan Corrects Monetary Reserves Management Strategy

Business Materials 12 November 2008 15:31 (UTC +04:00)

Azerbaijan, Baku, 12 November / Trend corr. I.Khalilova / The Azerbaijani Government corrected management strategy of strategic monetary reserves and its main task is not profitability, but providing safety, Elman Rustamov, the chairman of the National Bank of Azerbaijan's (NBA) Board, said.

The NBA and State Oil Fund of Azerbaijan Republic (SOFAR) shifted to conservative policy on management with reserves and at present they are preserved at central banks of leading countries of the world, as well as at the World Bank (WB), Bankfor International Settlements and organizations with sovereign ratings," Rustamov said.

In 2008 the NBA expects to get about $150mln income from its monetary reserves management.

"On the background of the current losses in the world, it is a good indicator, Rustamov said. Basic position of head of state is to maintain and protect monetary reserves at this stage. As it is strategic reserves of the country and speculative operations with reserves are inadmissible."

According to Rustamov, these actions will last in 2009, as well.

In 2008 the NBA balanced monetary composition of the portfolio and at present 60% of its monetary reserves is deposited in dollars and the rest 40% - in Euro and pound sterling.

Portfolio of monetary reserves is subdivided into two parts, including investment and operation. Therefore, majority of reserves is deposited in the US dollar.

Investment part of the portfolio always grows and at present 60% of reserves fall on it. As operation part, basically, is connected to service of interior demands and foreign debt, its 90% is deposited on dollars.

Part of Euro is considerable enough in investment portfolio.

Investment portfolio comprises different tools. Monetary reserves in this portfolio were palced in deposits, securities and some part was given to foreign management.

At present monetary portfolio of the State Oil Fund of Azerbaijan Republic (SOFAR) is balanced in following proportion: 50% of assets should be deposited in dollar and 40% - in Euro. The rest 5% should be deposited in pound sterling and 5% - amongst these currencies or in others.  This proportion can change within a quarter, whilst it should be balanced in within these limits. Strategic monetary reserves of Azerbaijan amounted to $18.2bln on 12 November.

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