Baku, Azerbaijan, Feb. 24
By Anvar Mammadov - Trend:
In 2015, the volume of net cash foreign currency sold to the population in Azerbaijan by banks in US dollars, amounted to $8.84 billion, according to the report of the Central Bank of Azerbaijan (CBA) on monetary policy for 2015.
The official exchange rate for Feb. 24 is 1.5593 AZN/USD.
During the reporting period, banks also sold to the population 830 million euros, according to the report.
The report said that a significant reduction in the supply of foreign currency and a sharp increase of demand for it was observed in 2015.
"The supply reduction is primarily explained by reduced revenues in foreign currency, which is associated with falling global oil prices and deteriorating economic situation in the partner countries," said the report.
"At the same time, increase in demand for foreign currency, which was observed in both the cash and non-cash segments, is due to the growth of dollarization," said the document. "The sharp fall in oil prices on global markets and a wave of devaluation in countries that are major trade partners of Azerbaijan, have strengthened the expectation of the national currency's cheapening and dollarization increase."
The growth in demand for foreign currency mainly occurred in the first quarter of 2015, according to the report. Thus, as much as 50 percent of the total annual volume in the US dollars, as well as 29 percent of the total annual volume in euros was sold in the first quarter of 2015, said the report.
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The document said that falling oil prices and devaluation of national currencies of Azerbaijan's main trading partners led to the need to bring the manat's rate in accordance with new prices for oil.
Considering this fact, on December 21, 2015 the Central Bank of Azerbaijan decided to switch to a policy of "floating exchange rate", which significantly reduced its intervention in the foreign exchange market, according to the bank's report.
The report also said that in 2015, the Azerbaijani manat cheapened against most global currencies. Thus, in the reporting period, the US dollar rose against the manat by 98.8 percent, while the euro - by 79 percent.
In general, in 2015 the net sales of foreign currency of the Central Bank of Azerbaijan totaled $8.4 billion, according to the report.
The document said that in 2015, the real effective exchange rate of the manat on non-oil sector fell by 23.5 percent, and that was mainly due to cheapening of its nominal effective exchange rate on non-oil sector by 23.3 percent.
At the same time, the cheapening of the real effective exchange rate of the manat is a factor that has a positive impact on the competitiveness in non-oil sector and stimulates export, the report said.