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CURRENCY CURVE: DOLLAR~RS KING AGAIN IN POST-ELECTION ARMENIA
By Siranuysh Gevorgyan
ArmeniaNow
http://armenianow.com/economy/38130/economy_dollar_dram_rate_elections
17.05.12 | 13:35
NAZIK ARMENAKYAN
Observers and a number of economic experts link the recently observed
depreciation of the Armenian national currency, the dram, with the
parliamentary elections and post-election realities in Armenia.
In the days following the May 6 vote the dram began to gradually lose
its value against other major currencies, in particular the dollar.
Most exchange offices in Yerevan on Thursday asked 399 drams for a
dollar, buying the U.S. currency for 394-396 drams per dollar.
(Before the elections the dollar was selling for around 392 drams
and was at around 380 for a sustained period of time before the
electoral season).
The current rate is in fact the highest rate of the dollar in Armenia
in years, and in particular, since the Central Bank let the Armenian
currency "free-float" in March 2009 amid a starting economic recession.
Economist Samvel Avagyan says that the abrupt decline of the dram
is mainly due to two factors - the end of the election processes in
Armenia, as well as the current trends on the international currency
market where the dollar is strong now.
"The pre-election period had a positive effect in terms of shoring
up the dram as a lot of dollars were thrown into the market. After
April 20, I estimate, an additional $70 million were introduced into
the market, which could not but strengthen the dram. In other words,
the candidates were taking out large amounts of dollars from their
bank accounts, turning them into drams, were distributing money as
electoral bribes or spending otherwise on their campaigns. Now the
process is over, the demand in drams has decreased and that's why it
has been depreciating," the economist told ArmeniaNow, adding that
now a reverse process is on when there is a greater demand in dollars,
but the supply of the drams remains the same or lower.
Still, economic experts are not inclined to evaluate the depreciation
of the dram as a phenomenon that will necessarily have a negative
effect on the Armenian economy. At this moment, they say, the exchange
rate has settled, with no tendencies of a further depreciation of
the Armenian currency. Economists do not exclude that it may be the
result of the Central Bank's intervention.
A certain strengthening of the dram is expected in the summer, the
peak of the agricultural season in Armenia, when there is usually a
greater demand for the local currency.
From: Baghdasarian
By Siranuysh Gevorgyan
ArmeniaNow
http://armenianow.com/economy/38130/economy_dollar_dram_rate_elections
17.05.12 | 13:35
NAZIK ARMENAKYAN
Observers and a number of economic experts link the recently observed
depreciation of the Armenian national currency, the dram, with the
parliamentary elections and post-election realities in Armenia.
In the days following the May 6 vote the dram began to gradually lose
its value against other major currencies, in particular the dollar.
Most exchange offices in Yerevan on Thursday asked 399 drams for a
dollar, buying the U.S. currency for 394-396 drams per dollar.
(Before the elections the dollar was selling for around 392 drams
and was at around 380 for a sustained period of time before the
electoral season).
The current rate is in fact the highest rate of the dollar in Armenia
in years, and in particular, since the Central Bank let the Armenian
currency "free-float" in March 2009 amid a starting economic recession.
Economist Samvel Avagyan says that the abrupt decline of the dram
is mainly due to two factors - the end of the election processes in
Armenia, as well as the current trends on the international currency
market where the dollar is strong now.
"The pre-election period had a positive effect in terms of shoring
up the dram as a lot of dollars were thrown into the market. After
April 20, I estimate, an additional $70 million were introduced into
the market, which could not but strengthen the dram. In other words,
the candidates were taking out large amounts of dollars from their
bank accounts, turning them into drams, were distributing money as
electoral bribes or spending otherwise on their campaigns. Now the
process is over, the demand in drams has decreased and that's why it
has been depreciating," the economist told ArmeniaNow, adding that
now a reverse process is on when there is a greater demand in dollars,
but the supply of the drams remains the same or lower.
Still, economic experts are not inclined to evaluate the depreciation
of the dram as a phenomenon that will necessarily have a negative
effect on the Armenian economy. At this moment, they say, the exchange
rate has settled, with no tendencies of a further depreciation of
the Armenian currency. Economists do not exclude that it may be the
result of the Central Bank's intervention.
A certain strengthening of the dram is expected in the summer, the
peak of the agricultural season in Armenia, when there is usually a
greater demand for the local currency.
From: Baghdasarian