On FX auction

10-06-2021

A next FX auction was held at the Central Bank with the participation of the State Oil Fund on 10 June 2021. $30.6M worth demand was fully covered at the auction. The average weighted exchange rate of the manat was 1.7000.

Demand at FX auctions, as well as both in cash and non-cash segments of the FX market has been significantly decreasing since February of the current year. Demand was lower than supply at 18 out of 19 FX auctions held in Q2 2021.

Recent trends are driven by accelerated global economic recovery, recovery of oil prices in global energy markets, high non-oil exports, significant improvement in expectations and a counter-cyclical macroeconomic policy, resulting from eased quarantine restrictions amid successful vaccination against COVID-19. Currently, unsold scheduled funds of the State Oil Fund at the auctions amount to $364M. According to preliminary estimates, in Q1 2021, current account had surplus of 5.6% of GDP. The above-mentioned internal and external factors stipulate that the exchange rate stability of the manat is conditioned by fundamental factors and that the FX market will be balanced in upcoming period as well.