Armenian central bank reassures the public as dram drops to record low

By bne IntelliNews December 18, 2014

bne IntelliNews -

 

The Armenian dram tumbled to record lows against the euro and the dollar on December 17, crossing the ceiling of AMD700 to the euro and AMD560 to the dollar, before recovering to be quoted early December 18 at AMD471. The Armenian unit of Russian-owned VTB Bank denied a report in a local online publication that it had sold $200,000 to an individual at the exchange rate of AMD760 per dollar.

The chairman of the Central Bank of Armenia (CBA), Arthur Javadian, sought to downplay the dram’s at one point 37% devaluation against the greenback over the last three months, according to news agency Arka. On October 1, the exchange rate was AMD407 to the dollar. 

Linked to the Russian ruble’s freefall, Javadian assured that “currently the dollar is overvalued, while the Armenian dram is too devalued,” chalking up the discrepancies to panic and speculation by investors.

Echoing Javadian, Armenian Prime Minister Hovik Abrahamyan said in a statement on December 17 that the government will stick to its floating exchange rate policy to ward off long-term instability and he reiterated the situation is the result of global and regional developments.

So far, Armenians have shown little sign of panic – they haven't lined up at bureaux de change to purchase hard currency, as in March 2009 when the dram lost about 30% of its value against the dollar in a few hours.

Local banks have tried to keep the situation under their control – some limiting the sale of foreign currencies, some sold them only to their clients, and some stopped selling them at all. 

To stabilize the situation and curb jobbing at forex market, the CBA raised the Lombard repor rate from 10.25% to 21% and started currency interventions via everyday auctions with limited amounts announced beforehand. Last week the CBA sold daily $6mn to banks, while this week it reduced those daily sales to $4mn.

Related Articles

COMMMENT: Great challenges for Eurasia call for decisive solutions

Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more

IMF calls for Central Asia to tighten monetary policy

Naubet Bisenov in Almaty -   Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more

COMMENT: Once I lived the life of a millionaire…

Peter Szopo of Erste Asset Management -   No, the title of this column is not the first line of the autobiography of an erstwhile emerging markets investor – although it could be. Somebody who ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss