BAKU, Azerbaijan, May 27. A total of $7.2 billion was sold in 95 currency auctions in Azerbaijan last year, which is 1.8 times more than in 2023, the statistics from the Chamber of Accounts on the draft law "On the implementation of the state budget for 2024" reads, Trend reports.
The average demand in auctions rose from $40.4 in the previous year to $75.5.
“The increase in currency demand was influenced by the growth in import volume amid fiscal incentives. The rise in sales compared to the previous year was also affected by the low base effect. In 2023, about half of the State Oil Fund transfers were directly transferred to the state budget in foreign currency without being put up for auction,” the opinion reads.
It was noted that the increase in foreign currency demand was also affected by the decrease in foreign currency inflows to the state budget (profit tax from contractors in the oil and gas sector fell by 34.4 percent) and the positive balance of money transfers (positive balance of money transfers fell by 49.7 percent).
It was emphasized that payments related to foreign government debt during the reporting year were also among the factors affecting the rise in foreign currency demand.
“The data released by the Central Bank of Azerbaijan (CBA) shows that currency sales were made during the year by the regulator to cover state expenditures in foreign currency (state projects and measures, defense, reduction of foreign currency liabilities, and other strategically important expenses). These sales in 2023 were provided by purchase-oriented intervention in the domestic market. Against this background, the CBA’s official international reserves decreased from $11.6 billion at the beginning of the year to $10.9 billion at the end of the year,” the opinion noted.
The data also shows that the CBA’s sales-oriented intervention ranked among the money supply reduction factors.
“Under fiscal operations carried out during the year, a decrease in sterilization operations by the CBA was observed. At the end of the reporting year, the nominal volume of CBA notes in circulation was 208.2 million manat ($122.47 million), which is 1.1 billion manat ($650 million) or 6.3 times less compared to the beginning of the year. Overall, the turnover volume in the securities market increased by 1.86 billion manat ($1.09 billion) during the reporting year, and against the background of the CBA notes’ reducing effect, the entire turnover growth was fully ensured by government bonds,” the statistics shared.
