The exchange rate in Azerbaijan is formed depending on demand and supply in the market, Director of Central Bank’s Monetary Policy Department Azer Alesgerov said at the annual conference of Fitch held in Baku.
According to him, 4-percent margin was eliminated in January 2017 and the banks sell foreign currency at the prices they want: ‘They sell foreign currency at prices close to official exchange rate. This means that the exchange rate was set by the market. If you look at the statistics of the currency market, you’ll see that the currency market operates under self-regulatory system. As in all countries, the Central Bank in Azerbaijan affects the processes in the currency market. Because the exchange rate is one of the main transmission canals of the monetary policy. Therefore, when we make a decision on monetary policy, we take into account that how it will affect the exchange rate. Monetary condition has also stabilized that currency market. Decline in money supply in early 2017 has stabilized the situation in the currency market. As surplus in the balance of payment had positive impact on the currency market, the monetary condition has also gradually softened. In 2017 manat and monetary market increased by 8.7%. We expect the surplus in balance of payment will continue in 2018. Macroeconomic situation allows us to soften monetary policy without creating non-stability. We also think that parameters of interest corridor will decline depending on realization of inflation forecast’.