TODAY.AZ / Business

CBA casts anchor to Asian markets

06 December 2013 [12:46] - TODAY.AZ
By AzerNews

The Central Bank of Azerbaijan (CBA) announced that it intends to acquire securities in Asian markets.

CBA Deputy Chairman Avtandil Babayev said the bank plans to purchase securities worth $ 500-600 million at the initial stage.

The Central Bank, whose strategic currency reserves form the country's strategic assets, is currently in talks with new foreign managers to work in the Asian markets, mainly in Singapore, Malaysia, Indonesia, and South Korea.

Babayev said the CBA is also interested in the Chinese market.

The CBA's s external managers currently manage funds worth $400 million, and the bank aims to bring the volume up to $1 billion.

The central bank developed a new strategy to manage its foreign exchange reserves in 2013. The new strategy includes the diversification of financial tools and the geographic structure of reserves under the existing economic environment in the world.

One of the changes in the bank's reserve management strategy involves increasing investments. Geographical expansion involves the acquisition of securities in Asian markets, while tools such as the acquisition of shares in companies, real estate, or gold are deemed risky for the CBA.

Babayev went on to say the CBA plans to increase the currency reserves at its disposal to $16 billion by late 2014.

The CBA expects its reserves to increase up to $14.5 billion by late 2013, and reach $1.5 billion in the next year.

"However, our main goal is not increasing the reserves, but ensuring their stability," he said.

The currency reserves of the CBA amount to $13.58 billion as of November 1.

CBA also plans to conduct a $1.5 billion currency intervention in 2014.

Babayev said the CBA purchased worth $2 billion at the county's currency market in 2013 with a view to increasing the worth of manat.

He said the supply of currency to domestic markets remains stable, and no significant deviations are recorded.

Governments with current account surpluses conduct currency intervention either to increase foreign exchange reserves or to prevent national currency appreciation.

Earlier, CBA Chairman Elman Rustamov said in 2013 the central bank conducted its monetary policy with an eye to the dynamics of economic growth and inflation expectations, which enabled it to maintain macroeconomic stability, achieve price stability, and retain a stable exchange rate for the manat currency.

Manat, Azerbaijan's currency, is currently assessed as the most stable and reliable currency in the region, and enjoys high public interest.

A number of leading central banks are interested in the manat as a reserve currency, and it is widely used in cross-border trades.

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