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Interest rate unlikely to decrease in Azerbaijan – Unicapital company

Finance Materials 19 April 2021 20:22 (UTC +04:00)
Interest rate unlikely to decrease in Azerbaijan – Unicapital company

BAKU, Azerbaijan, April 19

By Zeyni Jafarov - Trend:

The interest rate is unlikely to decrease in Azerbaijan amid an increase of expectations of inflation rise, Seymur Ibadov, head of the research and investment consulting department of Unicapital OJSC, told Trend on April 19.

“The interest rate announced in March is 3.9 percent, which is very close to the average indicator of the level corresponding to the inflation rate announced by the Central Bank of Azerbaijan (CBA),” Ibadov said.

"While tracking the changes in inflation and other global, regional and economic factors, the CBA may make a new decision on the inflation rate in late April 2021,” head of the department said. “However, given the current situation, stable interest retention is more expected."

Regarding the current state of the capital market, the head of the department said that following the results of the recent auction on the placement of medium-term bonds of the Azerbaijani Ministry of Finance, there was a noticeable excess of demand over supply at the stock exchange.

So, 17 investors submitted 27 orders, where the range of profitability ranged from 5.3 percent to 10 percent. As a result, 30 million manat ($17.6 million) was placed with an average yield of 5.3 percent.

Ibadov said that an auction for the placement of medium-term bonds of the Azerbaijani Ministry of Finance is scheduled for April 20 while the envisaged volume on orders is 40 million manat ($23 million).

“If the demand for the state bonds during trading exceeds the supply while the issuer is pleased with the price, the volume of the offered bonds can be increased up to 50 percent,” head of the department said.

In accordance with the decision of the CBA Board, the interest rate in the country is 6.25 percent from March 19. At the same time, the lower limit of the corridor was set at 5.75 percent while the upper one - 6.75 percent.

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