Central Bank of Azerbaijan: Share of 7-day deposit portfolio at 87%

As of December 1 of this year, the share of the 7-day deposit portfolio in the sterilization portfolio for open market operations in Azerbaijan amounted to 87%, Report informs referring to the Central Bank.

Since April of this year, the Ministry of Finance has placed the balance of the single treasury account in the form of deposits with commercial banks, which has led to an increase in liquidity in the banking sector due to autonomous factors: "Under these conditions, a 7-day deposit operation was used as the main open market operation to manage the AZIR near the policy rate."

Work to improve the operational structure of monetary policy continued during the reporting period. Thus, to more effectively manage short-term liquidity, the term of standing deposit operations and reverse repo operations was changed from 1 day to 1 night, the requirement for a minimum number of participants in note auctions was eliminated, and the 7-day repo, as an open market sterilization operation, was replaced with a 7-day deposit.

During this period, the Central Bank analyzed processes in the interbank money market and best international practices. Based on the results of this analysis, in close cooperation with experts from the European Bank for Reconstruction and Development (EBRD), improved rules for calculating the AZIR index were approved in May 2025. This rule ensures the consistent use of the AZIR index by financial market participants as a reference rate.

This year, the EBRD began issuing floating-rate bonds linked to the AZIR index in national currency. As part of this, the first tranche of 50 million manats was successfully placed through an open offer. This is not only a significant achievement for the Azerbaijani financial market but also an indicator of the use of the AZIR index as a reliable reference interest rate.

Reforms aimed at strengthening monetary policy transmission, particularly the development of money markets, also contributed to an improvement in the country's international credit rating in 2025.

($1=1.7 manats)