Announcement

Collapse
No announcement yet.

168 Zham: Possible Impacts Of Dram Devaluation Scenario

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • 168 Zham: Possible Impacts Of Dram Devaluation Scenario

    168 ZHAM: POSSIBLE IMPACTS OF DRAM DEVALUATION SCENARIO

    11:23 * 04.12.14

    A London-based internationally acclaimed Armenian numismatist and
    financial adviser has shared his forecasts on the possible impact of
    the Armenian national currency's devaluation.

    In an interview with the paper, Armen Papazyan highlighted several
    contributory factors on the world market, warning particularly of
    three major developments that require serious attention.

    "The highly possible scenario will be the shortage of foreign currency
    and cash Dollars, given that many market players in the dollarized
    country - where foreign and domestic loans are provided in foreign
    currencies - will seek to strengthen their money exchange rate to
    prevent a further devaluation. Many will wish to exchange their Drams
    with Dollars without waiting for further developments. The situation
    will further sharply increase the demand for cash and digital currency.

    "The second possible scenario is that the dollarization of deposits and
    loans may take a more severe turn, as individuals and institutions may
    decide that the devaluation risk is not worth the contribution they
    have by saving their sums in Drams. In that case, the dollarization
    process will get take a more active turn or just keep the same
    paces. And the demand for foreign currency will stand high again. In
    the aftermath of such a development - and also considering the past
    years' policies - foreign loans may again be used to meet the existing
    demands. And if this scenario is put into practice, the main challenge
    facing us - i.e. the creation of productive value - will not be pushed
    forward, with the loan policies remaining unchanged."

    "The third likely scenario is that many families and institutions
    already having financial difficulties may face a more severe financial
    crush for the simple reason that they may have to use an incomparably
    higher [sum] than their income to pay off their domestic and foreign
    loans in the country facing a 63% dollarization. The Dram devaluation
    will pose a risk to foreign loans. They will either not be paid at
    all or be paid at the cost of harm to the quality of people's life
    and the financial health of institutions. Of course. I describe all
    these developments and scenarios not only as an aftermath of the
    past couple of days' devaluation but also as possible developments
    stemming from the general situation," he said.

    http://www.tert.am/en/news/2014/12/04/168/1524949

Working...
X