Fitch Ratings: Azerbaijan's sensitivity to currency risk decreased

Strengthening the capacity to manage domestic liquidity and demand for foreign currency, as well as expanding the tools of the Central Bank of Azerbaijan (CBA) contributed to the recovery of the banking sector, reads the report of the international rating agency Fitch Ratings, Report informs.

Fitch Ratings also notes that the CBA has suspended the period of easing monetary policy since May.

The agency says that it doesn't expect a reduction in the additional policy rate, given the expected increase in inflation due to the growth of regulated prices and the projected increase in government spending in Azerbaijan's adjusted budget for 2024.

The agency believes that annual inflation in the first half of 2024 was below the CBA's target range (4%±2 percentage points) and will average 3.5% in 2024 and 4% in 2026. It will increase to 7%, which is 2.5% higher than the forecast for the "BBB" median.