Review of monetary sector in Azerbaijan (I Quarter 2013)

As of April 1, 2013, the amount of foreign exchange reserves of the Azerbaijani Central Bank (CBA) reached $12.332.8 billion (an absolute record) compared to $11.948.3 billion as of March 1 and $11.964 billion as of Feb. 1 and $11.694.8 billion as of early 2013. As a result, the growth of the reserves last month was 1.03 percent ($384.5 million). It reached 5.46 percent ($638 million) as of early 2013. According to the plans of the bank, as of 2013, the foreign exchange reserves must hit $ 15 billion.

Currency market and manat rate

The confidence in the national currency and the attractiveness of banknotes as means of circulation created the conditions for turning manat into a strong currency at the regional scale in terms of developing the Azerbaijani economy, including the dynamic development of the banking sector and payment systems.

The Azerbaijani Central Bank (CBA) sterilized the currency to the amount of $ 560 million to prevent significant strengthening of manat and neutralize the negative impact on the competitiveness of non-oil sector in the first quarter of 2013.

CBA intends to support stability of the national currency rate in 2013. CBA controls the national currency rate to avoid excessive exchange rate of manat to reduce and to increase the rate. A rate is maintained at a stable level through additional injections into the foreign exchange market of the country. The rates of annual change in the Azerbaijani national currency to the U.S. dollar did not exceed one percent for the last 15 years.

In 2012, the manat rate compared to the U.S. dollar strengthened by 0.19 percent, in January 2013 - by 0.04 percent. The manat cheapened by 0.06 percent in February compared to the U.S. dollar. It hit 0.7848 manat per $1 as of Feb. 28.

In March, the rate of the manat compared to the U.S. dollar remained stable, while maintaining 0.7848 manat to $1 at the beginning and at the end of the month.

In the first quarter of 2013, the euro exchange rate compared to the manat decreased by 1.6 percent. It should be stressed that the high volatility of the dynamics was characterized for EUR / AZN exchange rate.

Foreign exchange market

In Feb. 2013, the total volume of currency section of the Baku Interbank Currency Exchange (BBVB) on USD/AZN increased by 47 percent in March compared to the previous month.

Around 10 banks participated in the currency trades. Around 30 trading sessions were conducted and 24 transactions were registered.

The trading volume amounted to 27.048 million manat or 34.465 million in dollars on USD / AZN_TOD and the turnover on Swap_USD/AZN_TOD_1Week amounted to 20.391 million manat ($ 26 million). The average rate of the dollar to manat on this tool hit 0.7848 manat.

The average daily turnover in stock exchange electronic trading system on USD / AZN in March reached about $4.031 million, while the average amount of each transaction was $2.519 million.

The exchange rate of national currency on USD/AZN_TOD in accounting month increased by 0.01 percent from 0,7837 to 0,7836 for $1. Thus the US dollar average rate in consideration to manat made in March 2013 - 0,7848 AZN for $1.

As of March 2013, the total amount of trades at Organized Interbank Credit Market functioning within the limits of system BEST made 2 million manat.

The average monthly rate expected on the basis of bids of market-makers banks on the credits of BakIBOR within 90 days in March 2013 made 11.21 percent annual in manat and 11.84 annual in U.S dollars. A rate of BakIBID on manat deposits within 90 days made 5.65 percent annual in manat and 5.22 percent in US dollars.

Monetary base

The monetary base increased by 1.5 percent in Azerbaijan in March 2013 compared to February, but this has not stopped its decline in the first quarter.

According to the Azerbaijani Central Bank, as of April 1, 2013, the monetary base amounted to 10.195.1 billion manat compared to 10.042.1 million manat as of March 1, 9.842.2 billion manat as of February 1 and 10.515 billion manat (an absolute record) as of January 1, 2013

In 2011, the monetary base increased by 29.4 percent, while 27.06 percent in 2012. In 2013, its fall hit 3 percent.

Mortgage lending market

Loans amounting to 15.19 million manat, or by 4.47 percent more compared to the same period of 2012 were delivered through the Azerbaijan Mortgage Fund (AMF) under the Central Bank of the country as of April 1, 2013.

The mortgage lending volume in March exceeded the amount of loans issued in February 2013 by 2.05 times.

Mortgage loans worth more than 435 million manat were delivered in 2006-2012 through AMF (74.77 million manat - in 2012, 95.64 million manat - in 2011, 97.08 million manat - in 2010, 76.9 million manat - in 2009, 70.2 million manat - in 2007, 5.6 million manat - in 2006).

As of January-March 2013, the total amount of loan refinancing delivered by the banks earlier hit 12.05 million manat (37.07 percent less than the same period in 2012). AMF placed bonds at the amount of 11 million manat during the first quarter.

Around 72 percent of the total volume of given loans (41 percent of borrowers aged 18-29, 31 percent - 30-35 years old) fell to young people and families. Around 28 percent of the loans fell to borrowers over 36 years old.

Currently the maximum amount of a common mortgage loan through the AMF is 50,000 Manat at a rate of 8 percent with a payback period of 25 years. Terms under the social mortgage it is 50,000 manat at an annual rate of 4 percent with a payback period of 30 years. The initial payment under the social mortgage is 15 percent, whilst the conventional loan is 20 percent.

Stock market

The total turnover of transactions on all instruments of the Baku Stock Exchange (BSE) in the first quarter of 2013 totaled 1.608 billion manat, or by 39.99 percent less compared to the same period of 2012.

Such a decrease in stock market in the country is ensured by decreasing the state securities market by 41.88 percent, while the corporate securities market increased by 52.79 percent.

The state securities market volume exceeded 1.53 billion manat in January-March and the volume of corporate securities hit 82 million manat.

Comparative table on the results of trades on corporate sector at BSE (January-March 2013)

Market segments

2013 (31.03.13)

2012 (31.03.12)

Percentage ratio

Volume of transactions, AZN

Number of deals

Volume of transactions, AZN

Number of deals

Corporate bonds- (placement)

12 525 001,00


12 370 335,00



Corporate bonds - (secondary market)

21 619 651,11


24 313 096,36



Stocks - (placement)

45 020 620,54


16 565 800,00



Stocks -

(secondary market)

2 867 039,67


440 472,51



CS Market Total

82 032 312,32


53 689 703,87



Comparative table on the results of trades on state sector at BSE (January-March 2013)

Market segments

2013 (31.03.13)

2012 (31.03.12)

Percentage ratio

Volume of transactions, AZN

Number of deals

Volume of transactions, AZN

Number of deals

GB - (AR MF) (placement)






GB - (AR MF) (secondary market)



663 315,84



Notes (AR CB) - (placement)

119 871 034,67


294 564 796,09



Notes (AR CB) - (secondary market)

43 955 612,02


4 079 646,24



Repo operations

1 362 099 487,01


2 326 351 022,15



GS Market Total

1 525 926 133,70


2 625 658 780,32



- GB - government bonds,
- GS - government securities,
- CB - corporate bonds,

According to the State Securities Committee's report on the performance results for the first quarter of 2013, the volume of the securities market in Azerbaijan reached 1.7 billion manat in the first quarter of 2013, comprising 12.9 percent of GDP and 25.2 percent of non-oil GDP.

Despite the decline of the government securities segment for a number of reasons in the reporting period, the corporate securities market demonstrated a dynamic growth.

As a result of the revival trend on the primary and secondary market of corporate stocks and bonds, the corporate securities sector increased by 65 percent to 146 million manat. The increase of the capital requirements to banks by the Central Bank of Azerbaijan contributed to the growth of financing the stock market banks. During the reporting period the stock market has grown 2.2 times to 92 million manat, the primary market increased 2.7 times and the secondary market by 1.9 times.

During the first quarter of the year, the number of transactions on the corporate bond market increased by 50 percent, and the market volume amounted to 54 million manat. Meanwhile, the bonds market of the Azerbaijan Mortgage Fund increased 2.6 times to 29 million manat with the primary market increasing 2.2 times and the secondary market threefold. The amount of bonds offered by private companies grew by nine percent to 18.5 million manat, the report says.

Along with the soft stimulating monetary policy pursued by the CBA, the Ministry of Finance of Azerbaijan did not issue government bonds during the reporting period, which eventually led to a reduction in the government securities market by 42 percent to 1.5 billion manat.

The Azerbaijani National Depository Center extends the process of concluding the contracts with joint-stock companies to conduct and keep the shareholders' registers. In January-March, the number of new agreements reached 20.4 percent of their amount as of 2012.

According to the center, 2 agreements were signed in January 2013, 6 agreements in February and 3 in March. For comparison, the largest number of agreements were signed in February 2012 (8), which corresponded to a better index in July 2011.

Some 11 agreements were signed in January-March compared to 54 agreements for 2012 and 35 agreements in 2011.

The Azerbaijani National Depository Center stressed the decline in the stock market turnover by 40.2 percent in March 2013 compared to February. As of 2012, the turnover increased by 26.5 percent and phenomenal growth rates by 4.69 times in 2011.

According to the center, around 359 deals with securities with a nominal value of 68.544 million manat were concluded in March 2013 compared to 374 deals worth 46.941 million manat in January and 255 transactions worth 40.963 million manat in March.

The turnover amounted to 156.716 million manat on 998 transactions in January-March 2013.

Some 12 deals on share placement ensured turnover to the amount of 12.881 million manat in March 2013 compared to 9.9 million manat on 9 transactions in January and 61.219 million manat on 32 deals in February. The turnover of these transactions exceeds 84.001 million manat on 53 transactions in 2013.

In March, the turnover on 229 exchange transactions amounted to 15.030 million manat compared to 7.784 million manat on 323 transactions in January and 1.475 million manat on 280 transactions in February. The turnover hit 24.560 million manat on 842 transactions for the first quarter.

The turnover on 14 off-exchange deals was estimated at 13.051 million manat in March compared to 29.257 million manat on 42 transactions in January and 5.848 million manat on 47 deals in February. The turnover on off-exchange transactions amounted to 48.154 million manat on 103 transactions in January-March.

As of April 1, 2013, the exchange rate of manat hit 0.7846 manat per $1. The nominal volume of securities turnover in 2013 is estimated at $199.741 million compared to $ 3.899.665 million as of 2012. This turnover does not take into account the transactions with securities of the Finance Ministry and the Azerbaijani Central Bank.

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