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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
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