BAKU, Azerbaijan, October 13. The dollarization rate of Azerbaijan's banking sector deposit portfolio fell by 1.6 percentage points in the first half of 2026 to 34%, while the dollarization of the loan portfolio increased by 1.4 percentage points to 15.6%.
This was stated in the Financial Stability Report published by the Central Bank of Azerbaijan (CBA).
According to the report, despite changes in the dollarization rates of deposit and loan portfolios, both indicators remain close to historical lows.
Meanwhile, the banking sector's foreign currency position remains in compliance with prudential requirements. In the first half of 2026, the banking system's net open long foreign currency position stood at 260 million manat ($152.9 million), while the ratio of the total open foreign currency position to total capital was 3.7%.
Under the current rules, the total open foreign currency position in freely convertible currencies may range from minus 20% to plus 20% of a bank's total capital. For individual currencies, the limit ranges from minus 10% to plus 10%.
The report also addressed requirements for issuing consumer loans in foreign currencies.
Under the CBA's current regulatory framework, consumer loans denominated in foreign currencies may be issued only to borrowers who earn income in the respective currency.
Such loans may also be granted to individuals without income in the relevant foreign currency, subject to certain conditions. In these cases, the loan must be secured by foreign currency deposits held with the same bank or by other first-class collateral. The value of the collateral must not exceed 90% of the loan amount.
In addition, banks are subject to an extra requirement for risk-weighted assets (RWA) on business loans issued to borrowers who have no income in the relevant foreign currency or have not hedged their currency risk through other means. This requirement is intended to ensure that banks have sufficient capital resources to cover the risks arising from such loans.
