(MENAFN- Trend News Agency) BAKU, Azerbaijan, March 28. The level ofdollarization of deposits in Azerbaijan indicates the preservationof 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 alsomaintains equilibrium.
"The demand for currency increased last year at several currencyauctions organized by the Central Bank. This is due to theexpansion of import financing as a result of public investment andintensified consumption by the private sector. Non-oil investmentgrew by 17.1 percent year-on-year in the first 2 months of 2024, asignificant portion of which was financed from domestic sources was accompanied by an increase in advance payments on non-oilimports. The above confirms the growing demand for foreign currencyof imported origin," the data obtained from the CBA reads.
The Central Bank notes that generally, the foreign exchangemarket is functioning under the conditions of a positive balance ofpayments.
"The current account of the balance of payments had a surplus of11.5 percent of gross domestic product (GDP) at the end of 2023 trade balance is estimated at $2.3 billion in the first 2months of 2024. If current trends continue, the current account isprojected to be in surplus at the end of 2024 (January forecast:US$7–$8 billion). At the same time, the fact that the dollarizationof deposits continued to decline in February shows that confidencein the manat as a savings instrument remains. Thus, in February,excluding the financial sector, the level of dollarization ofdeposits of legal entities and individuals decreased by 1.3percentage points compared to January and by 9 percentage pointscompared to February last year," the CBA emphasizes.
To note, the Central Bank of Azerbaijan decided on March 28 tolower the refinancing rate from 7.75 percent to 7.5 percent.
The upper limit of the interest rate corridor was reduced from8.75 percent to 8.5 percent, while the lower limit was keptunchanged at 6.25 percent.
Meanwhile, the next decision of the Central Bank on theparameters of the interest rate corridor will be announced on May1.
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