Azerbaijan’s Central Bank to launch new auction mechanism

The new mechanism will allow the banks to submit applications both for the purchase and the sale of foreign currency.

The Central Bank of Azerbaijan (CBA) has decided to launch a new mechanism of auctions on currency sale in order to ensure a more flexible participation of banks in the currency market, Trend reports.

The new mechanism will allow the banks to submit applications both for the purchase and the sale of foreign currency.

Under the new mechanism, the official rate of Azerbaijan’s national currency, the manat, will be set for the next day on the basis of the weighted average exchange rate in line with the transactions concluded with commercial banks in the interbank foreign exchange market and in auctions.

“In the auctions held on the Bloomberg trading platform, buyers and sellers can place their requests in line with the initial rate announced by the auction organizer,” said the message. “The manat’s exchange rate against the US dollar will vary based on the ratio of demand and supply of foreign currency and the auction will end with the exchange rate determined on the results of the last trading session.”

On days when the auction is not being held, the manat’s official rate against the US dollar will be determined based on the weighted average rate formed in the currency market on the basis of the currency purchase and sale transactions concluded between banks.

The first bilateral auction was held on October 5 at the CBA with participation of the State Oil Fund of Azerbaijan (SOFAZ).

Official exchange rate of manat against the US dollar was set at 1.6035. (news.az)