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Dynamics of deposits in national currency remains positive in Azerbaijan – Gazprombank

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Dynamics of deposits in the national currency remains positive in Azerbaijan, Deputy Head of the Market Research Department at Russian Gazprombank Gulnara Khaidarshina told Trend.

According to Khaidarshina, in November, deposits in Azerbaijani banks in national currency increased by 3.5 percent compared to the previous month and by 29 percent since the beginning of the year.

"We consider this as a positive signal for Azerbaijan’s Eurobonds because the absence of a dollarization growth tendency is an important factor in supporting the sovereign ratings of this issuer," she said. "Taking into account the preservation of the cautious tone in the press release of the Central Bank of Azerbaijan (CBA), we don’t rule out another increase of the refinancing rate in January 2022 by 25–50 basis points, after which the Azerbaijani regulator will have the opportunity to take a break in tightening monetary conditions."

"The CBA will be able to consider the issue of reducing the rate in the second half of next year, provided that the inflation risks indicated in Friday's press release are not realized," the Russian bank’s representative noted.

Following the last CBA meeting this year, the regulator increased the refinancing rate by 25 basis points – up to 7.25 percent.

The upper limit of the interest rate band was raised by 25 basis points to 8.25 percent, while the lower limit was maintained at six percent. The Central Bank noted the increase in inflationary pressure, primarily under the influence of external factors. At the same time, it emphasized that the effect of the previous rate hikes had already begun to manifest itself.

According to the regulator's estimates, the share of monetary factors in the formation of inflation is less than 10 percent and tends to decrease. At the same time, the stable USD / AZN rate allowed limiting external inflationary pressure.

Besides, against the background of increased external inflation risks, the Central Bank again revised upward the forecast of average annual inflation to 6.3-6.6 percent, inflation at the end of the year – to 11.4-11.9 percent, which is almost twice the upper the border of the target range.

At the same time, the regulator shared its expectations for the inflation trajectory in 2022. In accordance with them, inflation will stabilize in the first quarter of next year, after which it will begin to slow down and return to the forecast range in the second half of 2022.

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Azerbaijan to simplify civil UAV registration procedures

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The Ministry of Digital Development and Transport of Azerbaijan will simplify the procedures for registration of civil unmanned aerial vehicles (UAVs) this year, Deputy Minister Rovshan Rustamov said, Trend reports.

Rustamov made the remark at an event entitled "Priorities in the field of digital development and transport in Azerbaijan".

According to him, to simplify these procedures, it’s necessary to create an appropriate infrastructure to digitalize all processes.

"We want to make the process of registering UAVs as simple as possible. First of all, it’s necessary to take a step towards digital transformation," he noted. "Besides, in order to import these devices to Azerbaijan and register them, it’s needed to apply to nearly seven government agencies, three of which are subordinate to our ministry."

"The consent of third-party institutions is also required, and this takes about two-three months. Thus, we have already identified specific areas and steps that can contribute to the simplification of these procedures," the deputy minister further said.

"In this regard, we can talk about a project which will be created based on a single portal accepting online applications. This year, we plan to fully implement this process," added Rustamov.

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CBA hold regular foreign currency auction

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The Central Bank of Azerbaijan (CBA) held a regular currency auction with the participation of the State Oil Fund of the Republic of Azerbaijan (SOFAZ) on Jan. 27, Trend reports referring to the CBA.

According to the CBA, the demand of local banks for foreign currency amounted to $84.2 million and was fully met.

The average weighted exchange rate of the manat to the US dollar amounted to 1.7 AZN/1 USD based on the results of the auction.

The CBA has begun to conduct foreign exchange auctions through a one-way sale of currency in a competitive environment since mid-January 2017.

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Finance Ministry to put up gov’t bonds for new auction

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The Baku Stock Exchange (BSE) will hold an auction on the placement of Azerbaijani Finance Ministry’s medium-term government bonds worth 35 million manat ($2.9 million) on February 1, 2022, Trend reports via the BSE.

According to the exchange, bonds with a face value of 100 manat ($58.8) each with a maturity of 1,092 days and a yield of four percent will be put up for the auction.

Interest payment dates are set for August 2, 2022, January 31, 2023, August 1, 2023, January 30, 2024, July 30, 2024, and January 28, 2025 (the principal payment deadline).

Pasha Capital CJSC will be the underwriter of the placement.

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