According to the Central Bank of Azerbaijan, in order to create condition for quicker participation of banks in the currency market, the Central Bank of Azerbaijan has made a decision on application of a new auction mechanism. The new mechanism allows market participants to sell and buy currency in the market. The participants will be able to place their currency orders at the initial exchange rate set by the organizer of the auction. Thereafter, during the auction the exchange rate is changed by taking into account the ratio of currency demand and supply and the auction ends at the exchange rate of the last auction.
The official exchange rate for next day will be set on the basis of average weighted exchange rate on deals closed with the commercial banks in the auctions and interbank currency market and publicized at the end of the working day. On the days when the auctions are not held the exchange rate for the next day will be set on the basis of average weighted exchange rate formed on purchase and sale deals closed among the commercial banks in the currency market.
On October 5, 2016, the first bilateral currency auction was held at the Central Bank of Azerbaijan with the participation of SOFAZ. The auction ended with the exchange rate of 1.6035 for 1 US dollar.