Azerbaijan's Central Bank eyes foreign currency trading through its own reserves

The Central Bank of Azerbaijan (CBA) is considering the possibility of holding foreign exchange auctions using its foreign exchange reserves, Elrad Seydiyev, director of the Financial Markets Operations Department of the CBA, said in an interview with Report.

He noted that such measures are aimed at sterilizing excess liquidity in the national currency depending on the market situation, and will allow satisfying the state's demand for expenses with a foreign exchange component.

Seydiyev added that the Central Bank's foreign exchange reserves have been growing in recent years, which is due to interventions in the foreign exchange market and income from reserve management.

"As is known, in 2022-2023, the central bank's net purchase of foreign currency on the market amounted to $4.2 billion. Since supply exceeded demand during this period, the regulator had to buy up foreign currency to maintain the exchange rate. All this led to an increase in the CBA's foreign exchange reserves. Under these conditions, the CBA uses sterilization operations to avoid excess liquidity," he said.