"Report": Repo transactions may reduce level of dollarization

Baku. 17 February. REPORT.AZ/ With the development of repo operations Azerbaijani banks would be able to solve the problem of shortage of manat. 

Report informs referring to the Equity Market Review 2016 issued by the Financial Markets Control Chamber. 

According to the report, last year 2 deals concluded in repo market and the volume of transactions made 2,064 mln AZN which is 60 times less than in 2015.

Notably, repo (repurchasing agreement), is a sale of securities for cash with a commitment to repurchase them at a specified price at a future date. Through this operation, commercial banks conclude short-term (1-30 days) deals with population in order to get manat supply.

Unlike deposit operations repo operations cover shorter period, therefore it is more effective in attracting manat. Also, the advantage of repo transactions is that the government gives state securities with 0% risk in exchange for funds raised. Via repo operations banks can offer state securities with profitability of 14-15% to population with manat bulk at lower rate and in such a way again raise funds.