BAKU: The level of dollarization of deposits in Azerbaijan indicates the preservation of confidence in the manat, Trend reports.
According to the data of the Central Bank of Azerbaijan (CBA), from the beginning of 2024, the foreign exchange market also maintains equilibrium.
“The demand for currency increased last year at several currency auctions organized by the Central Bank. This is due to the expansion of import financing as a result of public investment and intensified consumption by the private sector. Non-oil investment grew by 17.1 percent year-on-year in the first 2 months of 2024, a significant portion of which was financed from domestic sources. This was accompanied by an increase in advance payments on non-oil imports. The above confirms the growing demand for foreign currency of imported origin,” the data obtained from the CBA reads.
The Central Bank notes that generally, the foreign exchange market is functioning under the conditions of a positive balance of payments.
“The current account of
the balance of payments had a surplus of 11.5 percent of gross domestic product (GDP) at the end of 2023. The trade balance is estimated at $2.3 billion in the first 2 months of 2024. If current trends continue, the current account is projected to be in surplus at the end of 2024 (January forecast: US$7-$8 billion). At the same time, the fact that the dollarization of deposits continued to decline in February shows that confidence in the manat as a savings instrument remains. Thus, in February, excluding the financial sector, the level of dollarization of deposits of legal entities and individuals decreased by 1.3 percentage points compared to January and by 9 percentage points compared to February last year,” the CBA emphasizes.
To note, the Central Bank of Azerbaijan decided on March 28 to lower the refinancing rate from 7.75 percent to 7.5 percent.
The upper limit of the interest rate corridor was reduced from 8.75 percent to 8.5 percent, while the lower limit was kept unchanged at 6.25 percent.
Meanwhi
le, the next decision of the Central Bank on the parameters of the interest rate corridor will be announced on May 1.
Source: Trend News Agency