(Bloomberg) -- Azerbaijan’s central bank said it’s considering the resumption of dollar sales as preparations for UN climate talks in the Caspian Sea nation’s capital city help drive foreign-exchange demand.
President Ilham Aliyev said late last year that he expected as many as 80,000 foreigners to attend the 29th United Nations Conference of the Parties, or COP, in Baku on Nov. 12-22. It will be the largest international event the oil and natural gas-exporting country has hosted.
The central bank may use a $4.2 billion reserve it accumulated in 2022 and 2023 through purchases on the domestic market to help meet foreign-exchange demand. The rush for foreign currency has increased because of outlays on COP29 and “other government spending,” policymakers said in a statement Wednesday after holding the key interest rate at 7.25%.
Appetite for dollars is usually met by Azerbaijan’s sovereign wealth fund Sofaz, which was established in 1999 to manage the nation’s income from oil and natural gas. Demand at auctions organized by the central bank soared to $763 million in August and $826.3 million in July, with sales more than doubling to almost $4.8 billion in the first eight months of 2024 from a year earlier.
Azerbaijan is also investing in reconstruction in areas recaptured during two conflicts with Armenia since 2020. The government plans to spend almost $18 billion by the end of 2026 to build homes and infrastructure for an estimated 140,000 people, according to the Finance Ministry.
The central bank’s reserves stood at $11.78 billion of as of August 30, up from $9.36 billion a year earlier, according to its data. Sofaz’s assets increased 3.4% since the start of the year to $58 billion as of June 30.
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