The currency reserves of the Central Bank of Azerbaijan will exceed USD 10 bln in 2023, stated in the forecast of "Fitch Solutions" international rating agency, APA-Economics reports.
Agency nioted that it worths noting, however, that overreliance on energy has made the Azeri economy vulnerable to sharp movements in oil and gas prices. For instance, the end of the commodity super-cycle in 2015 led to a significant devaluation of the Azeri manat (that operates on a de-facto peg against the US dollar) as foreign currency earnings got squeezed (see RHC below). The country has since managed to raise its foreign reserves. However, levels remain lower than the 2014 high of USD 14.1 bln (import cover of 8.0 months) at USD 9 bln at the end of 2022 (import cover worth of 5.0 months).
"In our view, reserves will rise to USD 10.2 bln by the end of 2023 with further increases penciled in for the medium term. Foreign currency will be retrieved from savings made out of the country’s large current account surplus which came in at 29.8% of GDP in 2022. We expect to see only a small narrowing in the surplus to 26.9% of GDP in 2023," "Fitch Solutions" added.
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