The Central Bank will limit a sharp change in the exchange rate in 2017

The Central Bank will limit a sharp change in the exchange rate in 2017© RIA Novosti. Murad to Urogenitary the image Bank

The Central Bank (CB) of Azerbaijan will participate in the foreign exchange market in 2017 only in order to limit abrupt changes of the national currency, the manat, said in a statement the regulator.

The main Bank of the Republic on Saturday unveiled the main directions of monetary policy in 2017. Previously published in the «Strategic road map for the national economy of Azerbaijan», it was stated that CBA in 2017 will ensure a full transition to a regime of floating exchange rate of the manat.

«Next year, in accordance with the regime of a floating exchange rate of the manat, the Central Bank will focus on improving the mechanism of foreign exchange auctions. The Central Bank will participate in the foreign exchange market only in order to limit a sharp change of course. In 2017 will also continue work on the development of the foreign exchange market, including regulatory instruments on exchange rate risks», — said the regulator.

As noted in the statement, in 2017, the Central Bank in accordance with the «Strategic road map for the national economy» will continue to work to transition to a fully floating exchange rate of the manat.

«Floating the exchange rate helps to cushion the economy against external shocks, balance of payments facilitated by a flexible balancing of the economy, and enhances the impact of monetary policy on the money supply and interest rates. At the same time, the flexible mode contributes to the development of the domestic financial market, supports the use of several financial instruments. In addition, provides protection of foreign exchange reserves,» reads the statement.

Azerbaijan Central Bank from 16 February 2015 declined from the peg of the manat to the dollar and switched to a targeting course on the basis of the currency basket consisting of dollar and Euro. From now through December 19, the national currency depreciated by 25% (from 0,7844 to 1.05 manats per dollar).

Once the approved controller 21 Dec 2015 a decision about the transition to a floating exchange rate quotes fell a further 33% (to 1.55 manats per dollar). In total, the dollar rose against the Azerbaijani currency almost twice.

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