BAKU, Azerbaijan, October 29. Demand is
declining in Azerbaijan’s foreign exchange market, while household
bank deposits are rising, a trend attributed to an increase in
household savings in manats and the effectiveness of the Central
Bank’s monetary policy, governor of the Central Bank of Azerbaijan
(CBA) Taleh Kazimov said, Trend's correspondent reports from the event.


According to him, the country’s foreign exchange reserves have
increased by approximately $3.9 billion since the beginning of the
year. Of this amount, $3.6 billion was attributable to the Central
Bank’s foreign exchange interventions to purchase foreign currency,
while the remainder was due to other factors.


Kazimov noted that the decline in demand for foreign currency in
October may be linked to several reasons. At the same time, in
recent years, the Central Bank of Azerbaijan (CBA) has observed a
positive trend in the public’s attitude toward the manat. This is
reflected both in a decline in the level of dollarization of bank
deposits and in the fact that, in the cash foreign exchange market,
the public is increasingly acting as a seller of foreign
currency.


“Some experts and our colleagues believe that the public is
selling dollars from their savings and buying manats to cover daily
expenses. We are also monitoring this process. Our observations
show that during periods when the public sells dollars, the volume
of bank deposits also continues to grow rapidly,” he said.


The Governor of the Central Bank of Azerbaijan (CBA) stated that
during the first nine months of this year, demand deposits held by
individuals increased by 2.1 billion manat ($1.24 billion), while
time deposits held by individuals increased by 1.4 billion manat
($820 million). Thus, the total increase in deposits across these
two categories amounted to 3.5 billion manat ($2.06 billion).


According to him, statistical data show that nominal household
income rose by 9.6%, while real income, as calculated by the CBA,
increased by 3.7%.







“If the population had no income, we would see a decline in
deposits, since people’s ability to save would be limited. However,
both incomes and deposits are currently growing,” Kazimov
noted.


He added that the growth in deposits is driven by both an
increase in the number of depositors and an increase in the amount
of funds they deposit. A significant portion of the growth in
deposits comes from deposits of up to 30,000 manat ($17,649).


According to Kazimov, the decline in demand in the foreign
exchange market is linked not only to changes in the banking sector
but also to the public’s growing interest in the manat, as well as
to the results of the monetary policy pursued by the Central
Bank.


The CBA governor also stated that demand in the foreign exchange
market is influenced by economic growth in the non-oil and gas
sector, which stood at 2.6%.