Bloomberg: Due to COP 29, Baku will be forced to use the dollar reserve fund

Azerbaijan’s central bank said it’s considering the resumption of dollar sales as preparations for U.N. climate talks help drive foreign-exchange demand, Bloomberg writes.

President Ilham Aliyev announced at the end of last year that he expects about 80,000 foreigners to attend the U.N. COP29 in Baku on Nov. 12–22. It will be the largest international event hosted by the oil and natural gas-exporting country.

The central bank could use the $4.2 billion in reserves it has built up through domestic market purchases in 2022 and 2023 to help meet foreign currency demand. Currency turmoil has increased due to COP29 and “other government spending”.

The dollar demand is usually met by Azerbaijan’s SOFAZ foundation, which was created in 1999 to manage the country’s oil and natural gas revenues. Demand at central bank auctions increased to $763 million in August and $826.3 million in July, with sales in the first eight months of 2024 doubling to nearly $4.8 billion from the same period last year.