Vusal Gasimli: There is a shortage of manats in circulation

13:14 - 3.04.2020


April 3, Fineko/abc.az. In March alone the State Oil Fund of Azerbaijan purchased about AZN 3.3 bn of the national currency from the market, which is 4-fold more than the average monthly norm. Thus, there is a shortage of manats in the turnover.

ABC.AZ reports that the above-mentioned statement was made by Vusa Gasimli, the executive director of the Center for Analysis of Economic Reforms & Communications.

According to Gasimli, since investment activity and the manat deficit are not combined, a new balance will be found between the commodity and money markets: "Because the State stimulates the economy with both fiscal and monetary policies. This was also an appropriate step when there was a deficit in the issue of the national currency. According to the law of sum, an increase in the money supply can accelerate inflation. However, global recessions and falling oil prices in 1975, 1982, 1991, and 2009 reduced global inflation.

The current corona crisis also reduces global inflation, which will also have a restraining effect on prices in Azerbaijan, whose imports to the non-oil sector amount to $9.5 bn. Moreover, inflation cannot accelerate as the actual GDP in our country falls below the potential GDP, in other words, there is a deficit of issue - output gap. Thus, the Fischer effect in Azerbaijan will not be fully effective, in other words, its impact on nominal interest rates will be minimal, since inflation will not accelerate much due to monetary expansion."

By Elmir Murad

 

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