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Monetary base decreased by 36% in Azerbaijan

Report: The negative dynamics of the monetary base is related to the reduction of outstanding cash

Baku. 8 May. REPORT.AZ/ Monetary base in Azerbaijan on 1 May 2015 made 7 418, 6 million manats, which is 920.8 million manats, or 11% less in comparison with April 1 of this year.

Report informs referring to the Central Bank of Azerbaijan Republic (CBAR), the monetary base decreased by 3 686.4 million manats, or 33.2% in comparison with the same period last year. Since the beginning of the year, the monetary base decreased by 4 123,3 million manats or 35.7%.

Research Group of Report Agency believes that, the reduction of the monetary base due to the reduction of the outstanding cash flows or the balance of correspondent accounts of commercial banks in the CBAR: "If we consider that, after the devaluation of the correspondent accounts of banks formed by the mandatory reserves, in this case, the reduction in the monetary base associated with the reduction in circulation cash ".

From March 1, 2015, the Central Bank lowered reserve requirements from 2% to 0.5%.

According to analysts of Report Agency, this reduction affects all macroeconomic indicators: "As a result of the devaluation of the national currency and a sharp devaluation of the manat against the US dollar expected growth of the monetary base. It was predicted that during the conversion of foreign currency into the subjects of the national currency, the volume of manat money supply increase by 35%. However, this didn't happen. On the contrary, the money supply decreased. This is due to the negative expectations of the population that does not want to spend their dollar reserves."

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