Global economic crisis affected Azerbaijan’s currency reserves - REVIEW

Baku. 9 December. REPORT.AZ/ The process of decline of oil prices affects Azerbaijan’s currency reserves since last quarter of 2014.

Report’s expert group analyzed correlation of reduction of currency reserves of Central Bank of Azerbaijan (CBA) and State Oil Fund of Azerbaijan (SOFAZ) with oil prices since early 2014.

Notably, oil price slump negatively affected mostly CBA’s currency reserves. Thus, during six months since third quarter of 2014 CBA’s reserves shrank $6 bln. or 37% to $9.5 bln from $15 bln. In first quarter of 2016 CBA reserve was down to $4 bln.

“Beside this, SOFAZ currency stocks stabilized at $34 bln. in current year. The preservation of SOFAZ’s reserves were mostly conditioned by CBA’s monetary tightening measures aimed at preventing depletion of reserves”, experts say.

Notably, CBA Chairman Elman Rustamov several days before announced his commitment to continue strict policy, specifically monetary sterilization. But Report’s experts say CBA won’t be able to retract money from turnover more than they do now: “Demand in CBA’s recent emission auction was equal to 4% of offered volume. It means that AZN turnover cannot be reduced anymore."

Notably, M1 monetary aggregate (cash out of banks + demand deposits in AZN) amounted AZN 8 157.7 mln. on November 1, 2016. The minimum level of M1 aggregate since devaluation was reported AZN 6 273.7 mln. in January of this year.