Do We Need Currency Exchange Points?

The two latest pieces of financial news are related to the restoration of currency exchange offices and the Central Bank's statement on reducing troubled bank loans. The fact that exchange points will restore work, and this issue was discussed with the Financial Markets Supervisory Authority (FIMSA), was declared by MP Vahid Ahmadov the day before.

If before, in the conditions of "currency hunger" and the unrealistic rate of the Central Bank, the currency exchange offices were fueled by the "black market", since they did not observe the established 4% margin, today they can resume operations without creating such problems. However, the need for these objects has disappeared by itself, taking into account the fact that the exchange rate with the liquidation of the margin is now set by banks with a dense network of branches where it is possible to exchange currency.

If a draft is approved that provides for changes in the legislation, control in this segment will pass to FIMSA," Ahmadov said the day before. According to him, FIMSA offered people wishing to open currency exchange points, in addition to the fee of 500 manat, to invest 50 thousand dollars or 50 thousand manat. “However, we did not agree, and this question was removed from the agenda. In the new version, the amount is not specified at all. It turns out that the amount will be set by FIMSA,” he said.

“The resumption of the work of currency exchange offices is beneficial to FIMSA, since the structure is not financed from the state budget and is compelled to be content with bank fees. Thus, the supervisory authority will receive official income from the sphere previously owned by the Central Bank,” the bank expert Akram Hasanov replied to Turan's request. He also noted that the exchange rate for today is determined by banks, and currency exchange points are not a problem, but the question arises if they are needed. After all, at almost every step there are branches of banks where you can exchange currency.”

At the same time, it turned out from a conversation with a specialist that the long-term practice of attestation of exchange offices by the Central Bank was illegal, since earlier these facilities were only formally branches of banks, but in fact belonged to entrepreneurs. For this reason, the agreements between the CBA and the currency exchange offices were unofficial. Those wishing to open exchange paid a fee of 500 manat.

Recall that the Azerbaijani parliament is preparing to consider the proposal to again provide individuals and legal entities the opportunity to open currency exchange offices. Changes to the law “On Currency Regulation” will be considered in the Milli Mejlis on April 25.

Another piece of resonant news was the Central Bank's announcement of a 5% reduction in the volume of troubled bank loans. The total amount of overdue loans as of March 1, 2017 totaled AZN 1,556.4 million, having decreased by 76.7 million manat (4.7%) for the month. However, on an annualized basis, the indicator increased by 226.9 million manat (17.07%). Positive statistics of the regulator of financial flows are due to the strengthening of the national currency to the dollar by 9%, says Hasanov. From his words, the Central Bank does not disclose the currency structure of bad debts, but it is known that in the mass they are nominated in dollars.

So, as of February 1, the portfolio of troubled debts of Azerbaijani banks amounted to 1 633.1 million manat, or 850.5 million dollars at the rate (1.92). As of March 1, the volume of problem loans amounted to 1 556.4 million manat, or 888.6 million dollars at the rate 1.7515. That is, it turns out that in dollar terms the volume of problem loans increased by $ 38.1 million or 4.4%.

According to the expert, in its statements, the Central Bank manipulates statistics that change with fluctuations in the exchange rate. Similar statements of CBA and FIMSA about the growth of manat volumes of deposits in the previous year were caused by the fall of the national currency to the dollar, Hasanov said. -0--