DYNAMICS OF NOMINAL EXCHANGE RATE AFFECTS POSITIVELY REDUCTION OF INFLATION
The National Bank of Azerbaijan (NBA) finds, that dynamics of the nominal exchange rate, which strengthened in January-July by 4,5% (without the oil sector), affects positively the lowering of inflation processes. According to the NBA conclusions the econometric methods demonstrate, that by strengthening of the nominal exchange rate of AZM by 1 per cent with the lag in 5-6 months, the consumer prices index lowers by РЅР° 0,6-0,7%, Trend reports.
According to NBA, inflation in the country in July 2005 against December 2000 was 23,5% (including 23,5% in non-oil sector) against 43,1% in the group of the key trade partners of the country (Iran, Turkey, Russia), where inflation in the non-oil sector was 72,1%. With all these, the nominal effective manat rate (NEMR) against the currency of the main trade partners lowered by 8% (in the non-oil sector it grew by 8,3%), and the real effective manat rate dropped (REMR) by 10,6% (-22,3% in the non-oil sector).
By December 2004 NEMR grew by 10,7% throughout the entire commodity turnover (in the non-oil sector by 8,1%), and REMR вЂ" by 11,2% (8% in the non-oil sector).