CBA to complete researches under currency policy

Business Materials 25 December 2009 18:31 (UTC +04:00)

Azerbaijan, Baku, Dec. 25 / Trend N. Ismayilova /

The Central Bank of Azerbaijan (CBA) announced the results of researches which confirm the right policy to preserve stability of the national currency.

"While most of the CIS countries resort to the devaluation under the global crisis, Azerbaijan  refused the currency devaluation due to the surpluses of payment balance, risk of inflation growth and insignificant amount of external debts," CBA general director Khagani Abdullayev said

"The country's payment balance is a fundamental figure that we rely. A huge surplus reflects at the current account operations of the payment balance, and even the most conservative oil prices, it acts as a source of the growth of foreign exchange reserves," Abdullayev said

According to Abdullayev, the CBA directed roughly one billion dollars for intervention due to increase in the demand for American currency and with regard to maintain stability of the national currency rate, and the funds which are mainly preserved in the country

"Another reason of rejecting devaluation is inflation. This process led to the 8-15-percent inflation in neighboring countries. Our country depends on import, which, according to preliminary calculations, makes up one third of the domestic consumer market. The majority of processing plants indicated the share of imported intermediate goods production such as raw materials and semi-finished products makes up 40-60 percent by the CBA's survey," Abdullayev said

The CBA conducted simulation of the market through the various models, which showed that the change of the national rate by one percent leads to 0.6-percent increase in inflation

According to Abdullayev, the CBA considered the necessity of maintaining a stable national rate, and directed one billion dollars for its maintenance

The CBA provided balance between supply and demand on the foreign exchange market in the first quarter. However, since the first quarter, the CBA holds a neutral position, and began the outflow of dollar from the currency market in small amounts in last two months," Abdullayev said

On Dec. 25, the official exchange rate is 0.8033 manat to $1.

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