Central Bank`s transmission capabilities grow - Vusal Gasimli

13:23 - 15.01.2020


January 15, Fineko/abc.az. The Central Bank softened the manat exchange rate in 2019, reducing gradually the discount rate from 9.75% to 7.5%. As it is seen, reducing and raising funds that affect the manat exchange rate are regulated in such a way that the stability of the national currency is preserved.

ABC.AZ reports that this statement was made by Vusal Gasimli, the executive director of the Center for Analysis of Economic Reforms & Communications, when commenting on the president-chaired meeting on 13 January.

He noted that growth of non-cash turnover, expansion of digital payments, fight against the shadow economy, and growth of the securities market gives the Central Bank and the government more opportunities to regulate the manat exchange rate and inflation.

"In particular, the transmission functions of the Central Bank are growing," Gasimli added.

According to Gasimli, substantial reduction of inflation in Azerbaijan over the average inflation in trade partner countries contributed to the decline of competitiveness, exerting downward effect on the real effective exchange rate of the manat: "Despite the decline in percents in 2019, significant excess demand in Central Bank’s auctions shows that there is significant structural surplus in liquidity position of the banking system. This liquidity can become a source of financing not for consumption, but for the development of the real sector. If to take into account that last year the share of households in the loan portfolio exceeded 50%. This issue is the main task set for the Central Bank and the government. Last year more than AZN 2 bn were given to banks.”

 

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