Overview of Azerbaijani manat against major currencies for 1Q2020

Overview of Azerbaijani manat against major currencies for 1Q2020

BAKU, Azerbaijan, May 28

By Eldar Janashvili – Trend:

The rate of Azerbaijani manat to foreign currencies was formed in accordance with the ratio of supply and demand in the foreign exchange market in the first quarter of 2020, Trend reports citing the Central Bank of Azerbaijan (CBA).

CBA noted that despite the growth in demand in March on the foreign exchange market due to the indirect influence of processes taking place in the external environment, the national currency stabilized in the following months.

The growth in the volume of transactions in the foreign exchange market was also observed in the reporting period. The volume of transactions in the non-cash foreign exchange market for the first quarter increased by 26.1 percent compared to the same period of 2019 and amounted to $7.7 billion.

At the same time, 87.7 percent of non-cash foreign exchange transactions were made with the participation of US dollars, 12.3 percent - of other currencies. Meanwhile, 43.1 percent of foreign exchange transactions were carried out in the interbank foreign exchange market, 56.9 percent - in the intra-bank foreign exchange market. During the quarter, 99 percent of operations at the Ministry of Foreign Affairs were carried out in US dollar, 0.8 percent in euro, 0.2 percent in other currencies. At the Ministry of Foreign Affairs, the turnover on foreign exchange transactions was formed mainly due to transactions conducted on the Bloomberg platform.

The volume of foreign exchange transactions on the intra-bank foreign exchange market amounted to $4.4 billion, which is 79.2 percent of all transactions with dollars. At the intra-bank foreign exchange market, 91.6 percent of foreign exchange transactions accounted for foreign exchange transactions with legal entities. The volume of transactions on purchase and sale of cash foreign currency by banks increased by 60.8 percent compared to the same period last year and amounted to $2.2 billion, of which 2 billion or 89.7 percent are transactions conducted in US dollars.

During the first quarter of 2020, the CBA continued to organize trading in foreign exchange sales of the State Oil Fund of Azerbaijan (SOFAZ) both in accordance with the schedule and outside it. The organization of trading outside the schedule was associated with a sharp increase in demand for foreign currency in March.

In the first quarter, a total of 26 foreign exchange auctions were held at the CBA. Since April, a decrease and stabilization of demand has been observed in the foreign exchange market. Over the reporting period, the official rate of the manat to the US dollar was determined based on the average rate on interbank transactions, including trading on the Bloomberg platform and operations outside the auction.

The average daily official rate of the manat against the US dollar amounted to 1.7 manat for the quarter. Foreign currency purchase rates set by banks were close to official. The average daily purchase rate of commercial banks amounted to 1.6986 manat, and the selling rate - 1.7027 manat. The difference between the official exchange rate and the weighted average purchase and sale rates of commercial banks amounted to 0.2 percent or 0.0041 manat. During the quarter, the manat rate changed in different directions against the currencies of countries - trading partners. Thus, the manat rate went up by 10.6 percent against the Turkish lira, by 18.4 percent against the Kazakh tenge, by 28 percent against the Russian ruble, by 17.6 percent against the Ukrainian hryvnia, and by 14.8 percent against the Georgian Lari.

During the reporting period, the manat fell 1.3 percent against the Swiss franc and 0.8 percent against the Japanese yen. The dynamics of bilateral courses also influenced the dynamics of the multilateral course. The nominal effective rate of manat to non-oil gross trade increased by 6.1 percent, and the real effective rate by 7.4 percent.

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Follow the author on Twitter: @eldarjanashvili

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