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Strategic currency reserves reach $49 billion.

Central Bank of Azerbaijan (CBA) has talked on inflation expectations, discount rates, currency reserves, and other issues of the country's finance and banking sector.

Azerbaijan's strategic currency reserves have increased to $49 billion by late June, said Elman Rustamov, Chairman of the CBA, at a press conference.

In his words, the country's foreign exchange reserves increased by 9.4 percent compared to the beginning of the year. This indicates that the balance of payments is formed with a surplus. 'The situation in foreign markets remains favorable.'

Most of the reserves account for assets of the State Oil Fund of Azerbaijan (SOFAZ).

'There has been surplus in the foreign trade balance of Azerbaijan since the beginning of the year, and exports, including those of non-oil products, are growing,' he said.

As for the inflation rate in the country, Rustamov stressed that inflation will be within the declared framework, at the level of 4+-2 percent this year.

He underlined that the stabilizing factors affecting inflation risks in the country remain and the polls testify to this.

Thus, in June, only 2.3 percent of the respondents said that they expect acceleration in inflation rates. This is 10 points less than in March.

Referring to the question on the discount rate, Rustamov noted that the CBA will continue to determine it after analyzing all the macroeconomic processes in the country.

He added that the reduction of the discount rate is a factor in decrease of interest rates on loans, noting that, however, other factors also affect this.

Rustamov went on to emphasize that CBA reduced discount rate from 8.5 to 8.25 percent.

'The upper limit of the percentage corridor was reduced from 10.5 to 10.25 percent, the lower one - from 6.5 to 6.25 percent,' he said.

In his words, the reduction of the discount rate and interest rate parameters is associated by the stabilization of oil prices, low inflation and a stable macroeconomic situation in Azerbaijan.

This is the fifth reduction in the discount rate by the CBA this year. Since the early 2019, it decreased from 9.75 percent to 9.25 percent on February 1, from 9.25 percent to 9 percent on March 15, from 9 percent to 8.75 percent on April 26, and from 8.75 percent to 8.5 percent on June 7.

In turn, Adishirin Gasimov, Director of Cash Department of CBA, stressed that the Bank will introduce new technologies to collect unsuitable banknotes in accordance with the new rules.

He noted that new parameters installed in the Bank's reader equipment will be applied in determining the unsuitability of banknotes.

Gasimov further added that the Bank also plans to introduce new containers for the transportation of money. 'This system already exists in Europe and the U.S. In case of illegal opening of money containers, embedded capsules with indelible paint stain the banknotes, which makes them unusable.'

Currently, the issue is being considered by experts and the Financial Market Supervisory Authority (FIMSA) of Azerbaijan.

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Publication:Azer News (Baku, Azerbaijan)
Geographic Code:9AZER
Date:Jul 29, 2019
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