Real effective rate of manat on non-oil sector increases by 2 percent

Azerbaijan, Baku, Nov. 15 / Trend N. Ismayilova /

The Central Bank (CBA) sterilized foreign currency to the amount of $972.5 million during the first three quarters of 2010, while an intervention aimed at the sale was made the same period of last year, the CBA's report on monetary policy said.

"During the reporting period, the Central Bank implemented its rate policy in terms of expanding channels of a proposal on the foreign currency market," the report said.

The demand for foreign currency decreased compared to the corresponding period of last year.

It was noticeable in terms of the amount of cash brought by banks and currency sold to the public. Thus, the amounts of foreign currency imported into the country and exchange operations fell by 10.6 percent during the reporting period compared to the period of 2009.

The exchange rate of manat to dollar is fixed at 0.05 percent in January-September 2010.

The nominal effective exchange rate of manat was fixed in January-September compared to the currencies of some countries-trade partners of Azerbaijan, and cheapened compared to the currencies of other countries. The dynamics of the nominal effective exchange rate of manat had an impact on the change in the real effective exchange rate.

The manat cheapened nominally and really compared to the currencies of some countries (Ukraine, Kazakhstan, Turkey, Japan) during the reporting period. The manat was fixed nominally by cheapening really compared to Iran's currency.

The nominal effective rate on non-oil sector in the total turnover increased by 3 percent. It had a downward effect on inflation for the nine months.

The inflation in the partner countries contributed to reducing of real effective rate by 0,8 percentage points up to 1.1 percent.

In particular, the total strengthening of real effective rate of manat was observed in foreign countries. The real effective rate on non-oil sector increased by 2.2 percent.

The nominal and real effective rates increased by 1.5 percent and 1.7 percent respectively compared to the same period of last year.

The inflation in Azerbaijan for the first nine months exceeded the level of consumer price index in the U.S., EU, Japan, Israel and China. But it was below the inflation rate in Turkey, Russia, Georgia, Iran, Ukraine, Kazakhstan and Belarus.