Gazprombank: Dollarization of deposits in Azerbaijan declining slower than foreign currency loans

Dollarization of deposits among the population is contracting slower than the share of foreign currency loans in the cumulative loan portfolio of banks, said Gulnara Khaidarshina, chief CIS economist, deputy head of research at Russia’s Gazprombank, Report informs.

She noted that dollarization of household deposits is gradually decreasing amid tightening monetary conditions, but remains elevated.

According to the CBAR, the proportion of foreign currency household deposits fell from 39.2% as of end 2022 to 37.2% in April, marking a new low since the onset of the pandemic.

“Current monetary conditions provide for deposit dollarization consistently remaining below 40%. To recap, the leading rating agencies consider a material increase in dollarization of deposits as one of the factors for potential pressure on Azerbaijan's sovereign ratings,” she added.