Moody’s downgraded Azerbaijan from investment grade to Ba1
Following S&P’s move last week, Moody’s downgraded Azerbaijan’s sovereign credit rating from Baa3 with a stable outlook, last affirmed on December 4, 2015, to Ba1 and placed the ratings on review for a further downgrade. Falling oil price and associated worsening of medium-term economic growth prospects, along with loss of confidence in the currency and deterioration of fiscal and external position, were the drivers behind this decision.
Demand for FX fell to US$ 66.0mn
In three FX auctions organized by the Central Bank over the last week, the regulator offered US$ 600mn, while demand was limited to US$ 66.0mn, which is 70.0% lower than in the previous week.
M2/GDP ratio fell to 15.8% in December 2015
Central Bank data point to further monetary tightening in December 2015, with M2 falling to AZN 8.6bn (-50.6% y/y, -4.8% m/m). As a ratio to GDP, M2 fell from 29.5% in 2014 to 15.8% in 2015.
Deposit dollarization reached 81.9% in December 2015
With revaluation of FX deposits and probably a further shift from AZN deposits to FX deposits, the deposit dollarization ratio surged to 81.9% in December 2015 (+6.0 ppts m/m, +32.1 ppts y/y).
Crude oil exports are down 16.8% y/y in January 2016
According to SOCAR statistics, Azerbaijan exported 1.8mn tons of crude oil in January 2016 (-16.8% y/y, -16.2% m/m). Azeri Light crude oil price fell further in January 2016 to US$ 32.3/bbl (-34.7% y/y, -16.1% m/m). As a result, receipts from crude oil exports declined to US$ 0.4bn (-45.7% y/y, -29.7% m/m).
