MP:'It is necessary to saturate the market with exchange offices'

Currency exchange points in Azerbaijan will be reintroduced in a new form, according to Taleh Kazimov, the chairman of the Central Bank (CBA). Kazimov made the announcement during a meeting of the Committee on Economic Policy, Industry, and Entrepreneurship of the Milli Majlis on June 5.

The plan is to establish institutional currency exchange offices instead of small-scale ones. Currency exchange points were widely operational in Azerbaijan until 2016. However, following two consecutive devaluations in 2015 that led to a significant depreciation of the manat, their activities were terminated, and licenses were revoked. This move was made based on the "rules for organizing exchange offices and conducting exchange operations," which required exchange offices to be located in the same territorial unit as the bank, branch, or department itself. Currently, currency exchange or purchase can only be conducted at banks.

Rufat Guliyev, a member of the Committee on Economic Policy, Industry, and Entrepreneurship of the Milli Majlis, explained to Turan that  the decision to close exchange offices in 2015-2016 was due to significant irregularities in the system that posed a threat to the financial system. The devaluations created concerns about uncontrolled currency sales negatively impacting the manat's parity with the dollar.

Guliyev emphasized the need to open bank branches and currency exchange offices in the regions, citing the country's tourism development programs and the growing economic and financial power of Azerbaijan. He also mentioned the positive balance resulting from currency sales, which necessitates saturating the market with exchange offices.

Regarding the exchange rates at these offices, Guliyev stated that they should be determined by the state and the Central Bank. However, he suggested setting corridors to ensure exchange offices can make a profit without causing exchange rates to collapse.

Economist Nazim Beidemirli, in an interview with RadioAzadlig, drew attention to the previous liquidation of exchange offices in 2016, which was aimed at preventing foreign currency flows, but led to the process of monopolization.Baydemirli expressed concerns about the dependency of newly opened exchange offices on banks, stating that if banks monopolize the exchange offices and licenses are only issued to them, it would not be convenient.

Baydemirli also noted that exchange offices should determine currency rates based on supply and demand, but in Azerbaijan, the currency rate is administratively set. He highlighted the 4 percent margin for currency exchange, indicating that banks cannot sell below or above this margin determined by the Central Bank, which is a sign of monopoly.