CBA sterilises $845 million worth of currency

Business Materials 21 May 2013 14:39 (UTC +04:00)

Azerbaijan, Baku, 20 May / Trend A.Akhundov /

To prevent significant strengthening of the manat and thereby neutralising the negative impact on the competitiveness of the non-oil sector in the first quarter of 2013, the Central Bank of Azerbaijan (CBA) conducted a sterilisation of the currency to the sum of $844.7 million, according to a report from the Central Bank of Azerbaijan (CBA) on monetary policy in the first quarter of 2013.

'This year the CBA continued its exchange rate policy with bilateral targeting of the dollar to the manat. Under the conditions of a large surplus in the country's balance of payments, the offer in the currency market exceeded demand', the report said.

Despite the fact that in the first quarters of the past five years the rate of manat to the dollar rose in price by an average of 0.4 per cent, in January-March 2013 the manat's rate against the dollar remained unchanged. The standard deviation was also low (0.0001). The stability of the national currency had a positive impact on the environment and sustainability of the financial sector. During the reporting period the manat appreciated in nominal and real terms with regards to the currencies of the U.S., Eurozone, UK, Turkey, Russia, Ukraine and Georgia

In January-March, the nominal effective exchange rate (NER) of the manat on the non-oil sector rose by 0.8 per cent in total turnover. The share of change of the exchange rate of manat to the U.S. dollar in terms of NER averaged 32.8 per cent, while the share of changes in exchange rates of the partner countries to the dollar were at 67.2 per cent. According to model estimates, the strengthening of NER by one per cent leads to lowering of prices by 0.28 per cent.

'This means, in the reporting period, the Central Bank ensured stability of bilateral exchange rate of the manat and the dollar. The multilateral rate of the manat rose which is a positive development in terms of achieving the objectives for inflation', the report said.