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CBA will prevent strong appreciation of manat

Business Materials 23 May 2011 19:15

Azerbaijan, Baku, May 23 / Trend N.Ismayilova I.Khalilova/

The Azerbaijani currency market records a balance, as proposal slightly exceeds demand while manat strengthens by about 1 percent, Director General of the Central Bank of Azerbaijan (CBA) Khagani Abdullayev said on Monday.

"The situation with the strengthening of manat will depend on the payments balance, but in any case, the CBA will not allow the strong strengthening. Thus, if a surplus of the payments balance was at $ 15 billion in 2010, the minimum forecast is $13-$14 billion in 2011. But, the figure may exceed $15 billion," Abdullayev said.

He said the CBA has always focused on the real effective exchange rate, which is defined by two parameters - the inflation in Azerbaijan and inflation in the countries - trade partners. The Central Bank aims to maintain inflation in the country at least at the level of those countries.

"A normal macroeconomic framework, to which we go, is the ratio of broad money (M2) to inflation in the same interval as in 2010. Money supply growth is expected to reach 30-35 percent, and forecast of the average annual inflation rate ranges between 7 - 8 percent," he said.

The CBA, leading payment balance statistics, stated the 47.8-percent growth in the current account surplus in the payments balance in annualized calculation. Thus, the current account surplus for 2010 totaled $ 15 billion compared to $10.2 billion a year earlier. At the time, the current account surplus of oil and gas sector amounted to $19.9 billion, which completely covers the deficit in non-oil sector at $4.8 billion.

The national currency appreciated by 1.8 percent in 2009 and by 0.6 percent in 2010. The rate of manat against the dollar has appreciated by 0.65 percent in the first quarter of 2011.

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