BAKU, Azerbaijan, Mar. 15
By Zeyni Jafarov - Trend:
The Central Bank of Azerbaijan (CBA) managed its foreign exchange reserves amid the global economic shock caused by the COVID-19 pandemic and accompanied by massive monetary and fiscal stimulus at the international level in 2020, Trend reports on Mar.15 referring to a source in the CBA.
According to the source, the main priority of the foreign exchange reserves management policy was the safe and liquid storage of funds.
Within the strategy and rules for managing foreign exchange reserves, these reserves of the CBA were divided into investment tranches, which are an operational and accumulative instrument that ensures current activities. The regulator managed them in accordance with the purpose of each tranche.
The operating tranche, which directly supported the central bank's monetary policy during 2020, was kept in US dollars, which is the dominant foreign trade currency.
The investment tranche, which serves to generate investment income, was maintained at 90 percent in the US dollar, seven percent in the euro, and three percent in the British pound. As a result, by the end of the reporting year, 90 percent of official foreign exchange reserves were kept in the dollar, five percent in euro, two percent in the pound, and three percent in SDR (Special Borrowing Rights of IMF).
In order to ensure efficiency, the regulator managed its foreign exchange reserves by investing in liquid and high-quality government, quasi-government, and corporate debt obligations of foreign countries. Along with internal management, the Central Bank continued to cooperate with external managers in the control of foreign exchange reserves.
The efficiency of investment portfolios has been further enhanced through the use of the services of external managers. Measures were also taken to transfer the best world experience to internal management.
According to the CBA, in 2020, its foreign exchange reserves increased by $112 million, or 1.8 percent, amounting to about $6.4 billion by the end of the year. Income from the management of foreign exchange assets formed at the level of $93.65 million.
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