Azerbaijani financial market participants to receive tools to guarantee currency risks

Business Materials 12 June 2018 20:54 (UTC +04:00)

Baku, Azerbaijan, June 12

By Azad Hasanli - Trend:

Participants of Azerbaijani financial market will be able to obtain hedging tools in order to guarantee currency risks, a source in the Azerbaijani government told Trend June 12.

Presently, Azerbaijan’s Financial Market Supervisory Authority (FIMSA) is engaged in the development of hedging tools, the source noted, adding that for this purpose, the financial regulator develops legal framework and platform.

Presently, the main hedging tools are futures, swaps, forwards and options. The source didn’t specify which tools the FIMSA plans to implement.

Presently, companies in Azerbaijan have to hedge currency risks through the Dutch TCX Fund. The problem is that hedging of Azerbaijani manat through this fund is not always possible. To this end, TCX allocates tranches worth $20-30 million with a certain periodicity.

“The opportunity to hedge risks inside the country would positively affect the financial markets of Azerbaijan,” the source said. “Today, there is the most favorable situation for this - the country’s economy is developing, and the manat rate is stable, which makes it possible to provide hedging at low rates.”

The lack of hedging tools in Azerbaijan causes problems for international financial institutions (IFIs) as well. In particular, small tranches of TCX limit the ability of IFIs to lend in manats.

The source noted that the State Oil Fund of Azerbaijan (SOFAZ) could play the role of the hedge fund in Azerbaijan.

Presently, SOFAZ sells dollars to local banks through currency auctions, but the fund could expand its activity in Azerbaijan’s financial market, according to the source.


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