Due to the high price of oil, Azerbaijan’s foreign exchange reserves increased to a historical maximum

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In January-May 2022, Azerbaijan’s strategic foreign exchange reserves increased by 1.9% – up to $54.2 billion, which is a record high.

According to the Central Bank of the Republic of Azerbaijan, the growth of reserves is due to positive trends, including in the oil and gas market. In particular, since the beginning of this year, the average price of Brent oil has been $105 per barrel.

The Central Bank emphasizes that the increase in gas exports from Azerbaijan also has a positive impact on the balance of payments.

“We see a significant decline in demand for currency at auctions in recent times. In May, $560 million was offered for sale at a foreign exchange auction, the demand amounted to only $288 million. In May, the volume of cash foreign currency purchased by banks exceeded the volume of foreign currency sales,” the information of the Central Bank emphasizes.

Azerbaijan’s strategic foreign exchange reserves are formed from the reserves of the Central Bank, the assets of the State Oil Fund and treasury funds of the Ministry of Finance. Prior to this peak level of $53.7 billion, Azerbaijan’s foreign exchange reserves were as of October 1, 2014. In the fourth quarter of 2014, the process of reducing foreign exchange reserves began, which continued in 2015-2016 due to the fact that they were sent to support the national currency. Since 2017, the growth of foreign exchange reserves has resumed.

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