Baku: The Central Bank of Azerbaijan's foreign exchange reserves have achieved a new milestone, reaching an unprecedented USD 15.3 billion. This marks a substantial increase of USD 3.8 billion, or 33%, since the start of the year. When combined with the foreign currency assets of the State Oil Fund of the Republic of Azerbaijan, the nation's strategic foreign exchange reserves now total USD 90.8 billion, providing coverage for approximately 41 months of imports of goods and services.
According to Azeri-Press News Agency, Executive Director Mr. Seydiyev attributes this increase to several factors, including the country's favorable external position, a current account surplus, and foreign currency revenue dynamics. The global energy market's positive price dynamics, coupled with robust exports of non-oil and gas goods and services, contributed to a trade balance surplus of nearly USD 9.5 billion in the first seven months of the year, as reported by the State Customs Committee. Additionally, money transfers during the same period amounted to USD 0.68 billion.
Mr. Seydiyev highlighted the ongoing dedollarization process within the financial sector, noting a decrease in the dollarization level of deposits by resident individuals from 40.6% at the end of 2021 to 25.8% in July this year. This trend reflects growing confidence in the national currency and underscores the country's financial resilience to external shocks. Since the end of 2021, strategic foreign exchange reserves have surged by 70%, while the Central Bank's reserves have more than doubled. Reserve management income has also bolstered strategic foreign exchange reserves.
High foreign exchange reserves act as a strategic buffer, ensuring financial resilience against shocks such as economic crises, global market volatility, and sharp increases in foreign currency demand. They enhance Azerbaijan's external resilience, financial flexibility, and ability to meet external obligations and finance imports as needed. International rating agencies recognize the country's robust external balance and substantial external assets as key factors in assessing its sovereign credit rating. For citizens and businesses, these reserves provide exchange rate and financial stability, enabling confident long-term planning and decision-making.
The Central Bank has engaged in foreign currency purchase operations multiple times this year. These operations are aimed at maintaining exchange rate stability, which is crucial for macroeconomic stability. The consistent excess supply in the foreign exchange market has led to pressures for the appreciation of the manat. By purchasing excess foreign currency, the Central Bank helps balance market supply and demand while contributing to the growth of foreign exchange reserves. These purchase operations have been communicated through previous press releases.
Looking ahead, the Central Bank may redirect some of the acquired foreign currency back into the market, depending on future demand. The current account of the balance of payments is expected to remain in surplus for the rest of this year and into the next, creating favorable conditions for increasing foreign currency revenues and reserves in the medium term. However, the actual trajectory of foreign exchange reserves will be influenced by external economic conditions and the balance of supply and demand in the foreign exchange market.