A $10 per barrel increase in the price of Azeri Light adds $1.2 billion to Azerbaijan's annual current account surplus, Central Bank Governor Taleh Kazimov said in an interview with Global Finance magazine, as reported by FinFly.
According to him, a $50 per 1,000 cubic meters rise in natural gas prices yields an increase in the surplus of approximately $900 million.
Kazimov noted that around 80% of Azerbaijan's non-oil imports come from energy-importing countries. "Therefore, a 10% increase in oil prices raises inflation in our trading partners by about 0.67%. Here, the nominal effective exchange rate absorbs most of the pressure," he said.
The Central Bank Governor emphasized that exchange rate stability serves as a key nominal anchor: "Where trade is the dominant transmission channel, a stable nominal exchange rate neutralizes most of the imported inflation, and expectations remain within the 4±2% corridor. At the same time, the policy rate corridor ensures predictable transmission of policy decisions. The third factor is buffer reserves: our strategic foreign exchange reserves grew by $700 million in the first half of the year, reaching $85.8 billion by the end of June, which exceeds 125% of GDP and amounts to about 400% of broad money," Kazimov noted.
