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Foreign exchange reserves of central banks rapidly decline

This contributes to significant currency fluctuations in the market

Baku. 8 October. REPORT.AZ/ Currency reserves of the world central banks are rapidly declining. This contributes to the expenditure of funds to support the national currency. Report informs referring to Bloomberg, the biggest reduction has affected China, and China's central bank has spent on the support of the yuan from the middle of last year, 480 billion USD. This figure exceeds the Greek economy by 2 times.

Analyst of the US investment firm 'Amherst Pierpont Securities', Robert Xingsheng notes that, the liquidity provided by central banks are gradually running out, which inevitably leads to an increase in volatility. According to him, the reduction of liquidity in the background of the upcoming rate hike by the Federal Reserve (Fed), in regard with the fall of China's foreign exchange reserves creates a fertile ground for currency fluctuations. Although currency traders in these conditions, a better chance to make money, but the increased volatility underscores the problem, urgent in the world economy, especially those that depend on exports of raw materials to China.

Average exchange rate fluctuations exceeded the maximum 2011. After the devaluation of the yuan in the III quarter of China's central bank cut its reserves to a record 179 billion USD.

Currency strategist at Westpac Banking Sin Callow states that, reduction of Chinese reserves reflects a stressful situation in the country, which could be a cause for panic in other countries. Now, many central banks are forced to spend reserves to stop the decline of their currencies. The Bank of Russia, for example, over the past two years spent about 160 billion USD to prop up the ruble."

Currency reserves of Azerbaijan have started to decline in August 2014. On October 1, 2015, official foreign exchange reserves decreased by 8 149.2 billion USD, or 53.6%. In general, subject to State Oil Fund of Azerbaijan (for the II quarter), foreign exchange reserves of the country decreased by 18.4%.

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