Monetary conditions in Azerbaijan facilitating steady dollarization of deposits at level below 40%

Dollarization of deposits among the population of Azerbaijan is contracting slower than the share of FX loans in the total loan portfolio of banks, Gulnara Khaidarshina, Deputy Head of Research at Russia's Gazprombank and Chief CIS Economist, said, according to Report.

She believes that dollarization of household deposits remains stable. According to the CBAR, the proportion of FX household deposits declined to 38% in May (vs. 39.2% at end 2022) and remained around the lowest level since the onset of the pandemic.

"Current monetary conditions are facilitating the steady dollarization of deposits at a level below 40%. To recap, the leading rating agencies consider a material increase in dollarization of deposits as a factor for potential pressure on Azerbaijan's sovereign ratings," Khaidarshina said.