CBA: Rate policy neutralizes negative impact of world processes on economy
Azerbaijan, Baku, Nov. 12 / Trend I. Khalilova /
The Central Bank of Azerbaijan (CBA) has started to strengthen the dollar rate compared to the local currency. The official rate of the dollar compared to the manat fell last Friday to a historic minimum of 0.7997 manat to the dollar. Today, the rate has risen 0.05 percent to 0.8001 manat to the dollar.
As of early 2010, as well as today, the dollar rate to the manat was 0.8029 manat to the dollar. Today, the rate fell by 0.35 percent.
The drop in the dollar on the world currency market has affected the mechanism of forming the rate in the country, the CBA told Trend.
"Supply and demand are the main factors affecting the formation of the manat-dollar rate on the domestic market," the bank said. "However, the CBA intends to conduct a policy of maintaining a stable national currency by late 2010."
The CBA exchange rate policy will also be implemented depending on the situation inside the country and the global financial climate in 2011. While conducting the exchange rate policy, special attention will be paid to inflation and ensuring the country's competitiveness.
The CBA explains such an exchange rate policy by the fact that it is necessary to pay attention to the change in the nominal effective exchange rate, that is, the multilateral as opposed to the bilateral exchange rate when studying the effect of the exchange rate on inflation.
The nominal effective exchange rate for the non-oil sector was fixed at three percent during the first nine months of this year.
"This limited the import of inflation into Azerbaijan," the bank said. "It also allowed for neutralizing the negative effects of accelerating inflation in partner countries and rising prices on cereals."
Many countries are now starting to actively stimulate export and economic growth by reducing the value of the national currency. However, the CBA considers it incorrect to link these measures with the exchange rate policy. It is possible to contribute to these processes through the exchange rate policy. The exchange rate policy pursued by the CBA, in accordance with the structure of the economy, aims to expand exports and economic growth.
"That is, while conducting its exchange rate policy, the CBA takes into account the need to protect the country's competitiveness," the bank said. "As a result of this policy, the real effective exchange rate of the manat on non-oil exports, most of which falls to Turkey, Russia, Ukraine, Georgia, Iran, Kazakhstan and Belarus, dropped by 1.1 percent over the first nine months of this year."
The official exchange rate is 0.804 manat to $1.