Local banks keep interest in deposit auctions

Demand for the deposit auction of the Central Bank of Azerbaijan (CBA) was 3.38 times higher than the offer.

The CBA reported that it took from banks 200 million manats ($117.6 million), however, the demand was at the level of 676 million manats ($397.4 million). The average weighted interest rate on deposit transactions concluded in the framework of the auction was 10.01 percent.

The CBA has started holding deposit auctions since June 2016. During a deposit auction, held twice a week, the CBA accepts deposits from commercial banks for placement.

The main purpose of deposit auctions is sterilization of the money supply (withdrawal of money from the economy), which is carried out by the Central Bank in the framework of monetary policy.

The CBA has begun to conduct deposit and currency auctions through Bloomberg’s auction platform since early July.

The Bank reported that the Bloomberg auction platform will be a single platform for these operations of the CBA.

The CBA said that designed to help central banks and financial ministries manage primary market operations, the technical capabilities of the platform has been recently further extended to facilitate transactions with foreign exchange instruments (spot and forward) and deposit auctions following the CBA request; originally the platform enabled to conduct transactions with securities and repo products.

The multilateral Bloomberg auction platform gives its participants the opportunity to watch the CBA auctions and take part in them, according to the Bank’s message.

Currently, 31 banks are implementing their activities in the country, 2 of which are the state-owned ones.