CBA Not to Control Currency Risks of Banks

The Board of the Central Bank of Azerbaijan suspended requirements for open currency position limits until 1 January 2016. In other words, the CBA will not regulate and monitor their currency risks.

The letter sent to the banks of the country on behalf of the Director of the Central Bank Rashad Orujov notes that this decision was taken on 26 February. However, the reasons for this decision are not reported.

 According to the lawyer Akram Hasanov, the CBA is not entitled to put off its liabilities of capping the foreign exchange position of banks. It is not provided in the law "On Banks" or in the relevant normative act of 2001.

"Rules for the definition and regulation of open currency position limit of authorized banks AR" are aimed at regulating the exchange rate risk of banks on foreign currency transactions. Foreign exchange position is demands and liabilities in foreign currency (including precious metals). Open foreign currency position characterizes the difference between them, which creates risks of loss of funds for banks under adverse changes in exchange rates.

Recall that on February 21 this year, the CBA decided to devaluate AZN relative to the US dollar at a level of 34%. As a result, banks have got to embarrass with the fulfillment of obligations that comes from the exchange rate difference between the received and issued funds in local and foreign currency. -- 08B-