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#1 alpha

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Posted 21 July 2004 - 12:41 PM

It's not the opposition who will change the government, its the events like this and financial wreck that will take people to streets.

Appreciation of dram will have serious consequences for the country. The price of exports will rise making already fragile Armenian economy more dependent on money transfers. This will ultimately kill what is left of Armenian industry.

AMD STABILIZATION RESULT OF IMPROVEMENT OF TRADE BALANCE

21 July 2004
ARMINFO News (Armenia)

© 2004 ARMINFO News Agency.


YEREVAN, JULY 20. ARMINFO. The AMD stabilization of Armenia's currency market is the result of improvement of the country's trade balance, said Gayane Matevosyan, Head of the Department for Operations of Financial Markets, RA Central Bank. She said that steady economic growth is being maintained, and inflation is lower than the CB-forecast inflation. The situation on the financial market testifies that liquidity in Armenia's banking system reached the highest level ever recorded, and a steady downtrend in interest rate can be observed.

Considering a high level of poverty in the country, the AMD stabilization results in greater confidence in the Armenian AMD. She accounted for the fall in the USD exchange rate by a number of factors, such as inflow of foreign exchange, a large number of tourists and increase in exports. According to the CB, a 40% increase in exports was recorded in the first half of this year as against the corresponding period of last year (precious and semi-precious stones, metals and articles from them exclusive); imports increased by 14%. In other words, exports exceed imports 2.5 times.

Private transfers to physical persons increased by 46% in the first half of 2004: a 31% increase was recorded in the first quarter, a 55% increase in the second quarter as against the corresponding period of last year.

According to the CB, on July 21 the USD exchange rate got stabilized within 505-510 AMD per US $1. -T-




Armenian Dram Gains More in Value against U.S. Dollar


By Gevorg Stamboltsian

One U.S. dollar was worth 500 drams on the morning of 20 July, whereas in the evening it had slumped to 493 drams. According to employees of currency exchange bureaus, the dollar tends to lose against the dram in July every year. But they have never before witnessed such sharp fluctuation.

"Nothing like this has happened during the last 10 years. They say the dollar will fall against the dram to 450 per dollar," a woman working in an exchange bureau told RFE/RL.

The head of the Financial Markets department of Armenia's Central Bank, Gayane Matevosyan, mentioned three reasons for the strengthening of the Armenian dram. One reason is increased private inflows of cash from abroad.

"Private transfers from abroad compared to the same period last year have increased up to 46 percent," Matevosyan told RFE/RL.
A second reason, according to the Central Bank official, is an increase in exports. Compared to the first half of last year, exports have risen by 40 percent.

Officials attribute the trend to the traditional peak period in visits to Armenia by foreign tourists.

Some analysts do not agree with these arguments, however. Independent expert Eduard Aghajanov told RFE/RL: "This is money laundering. There are no other explanations for this. If we attribute this to tourism, we had a peak in tourism in 2001 and even then we did not see such unbelievable fluctuations."

Talking about the mechanisms of money laundering, Aghajanov said he means first of all the flow to Armenia of money of "suspicious origin." "Only huge flows of such money can provoke such fluctuations," Aghajanov said.

The Central Bank official, though, denies those suggestions. Gayane Matevosyan admitted that the average sum of private transfers to Armenia has grown. But she said this growth is not enough to substantiate suspicions of money laundering.
Although the dollar has seriously slumped against Armenian Dram, market prices have grown even higher. The Central Bank, however, argues that market prices are not directly connected to the currency market. Besides, those prices have not grown too much.

"We don't see any serious growth in market prices. In the first six months, prices grew only by 4.4 percent compared to the planned 5.2 percent," Matevosyan said. The Central Bank declined, though, to predict the currency rates for the coming days.

But Aghajanov suggested that one cannot analyze the situation from an economic point of view. "Everything depends on the appetite of some clans," he said.

#2 Armen

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Posted 21 July 2004 - 04:59 PM

Alpha, while your arguments are well taken I would say that they are more suitable for a well developed exchange and financial market with independent mechanizms of regulation. You think very high of Armenian economy. It is matter of one call from Kocharian's office to order all the 5-7 importers (like Samo, Roubo etc.) to buy the whole amount of exchange that recently entered the Armenian market, which will depreciate dram. Moreover, they can directly order them to keep cosumer prices low.
Central Bank has been doing this for years. They have this situation every summer. However, it is interesting as to why they didn't expect the flow increase. Even if we assume this was money laundering the government would have known it for sure and the chairman of CB would have taken precautions.
An economic collaps in Russia or security threats in Georgia are the factors that directly influence the Armenian economy.

#3 alpha

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Posted 21 July 2004 - 06:48 PM

While I accept your argument about unsophistication of Armenian economy, however the fact that Armenian products will price themselves out from both external and internal markets due to currency appreciation is an economic axiom. It will have serious repercussions on Armenian economy and fragile manufacturing industry. The disappearance of the last remnants of industrial production, will consequently lead to decrease in demand for services that support manufacturing. The impact of such dire scenario will ultimately hit the pockets of already poor Armenian working class, whose patience is not limitless. Additionally I’d like to add that most of Armenia’s workforce is employed at small enterprises that are not controlled by “Kocharian and Co.”. These people pretty soon will find themselves even more dependent on outside remittances from their relatives.

#4 Sasun

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Posted 23 July 2004 - 09:59 AM

Here is another explanation. Indeed, Euro should be used more widely, I don't understand why people in Armenia hesitate to rely more on Euro. The gradual move from Dollar to Euro has been the tendency in Eastern Europe and other parts of the world in recent years.

Armenian Currency Set To Consolidate, Bank Expert Says

Yerevan, July 23, Armenpress - Asked to explain what are the reasons behind an unprecedented slump of US Dollar against the Armenian dram, Vladimir Badalian, the chairman of the Union of Armenian Banks, argued it was part of radical changes awaiting the national currency, an indication that the dram is consolidating its value against hard currencies. He then added that the dollar will tend to lose against the dram. One of the arguments, he cited in favor of that theory, were the developments in international currency markets with euro consolidating against dollar. He said that process could not failed to have its impact on Armenian market.

He then predicted that in the near future euro will grab a bigger place in Armenia's market forcing Dollar to yield its positions, which he said is normal given Armenia's drive towards close integration with Europe, especially that 40 percent of its foreign trade falls on EU countries.

Badalian said also that the consolidation of dram will prompt participants of the domestic market to keep their deposits in drams. Unlike some years ago now many depositors choose to keep their accounts in drams. He admitted that a weaker dollar is sustaining some damages to exporting companies, but added that it should not have any effect on export volumes, as their structure is such that allows the companies to maneuver.

He attributed high domestic prices, though the dollar has seriously slumped against Armenian Dram, to the absence of criteria typical of free trade.

Earlier this week a Central Bank official cited two arguments to explain the decline of exchange rate of US dollar. The head of the Financial Markets department of Armenia's Central Bank, Gayane Matevosyan, said one reason was the increased private inflows of cash from abroad., which she said have increased by 46 percent if compared to the same period last year and a second reason was an increase in exports, which she said if compared to the first half of last year, have risen by 40 percent.

#5 Sasun

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Posted 23 July 2004 - 11:05 AM

Minister Does Not Rule Out Speculations in Armenian Financial Market

www.armenialiberty.org
By Gevork Stamboltsian

Speaking to reporters on Friday, the Minister of Finance and Economy Vardan Khachatrian didn't rule out that the currency fluctuation in Armenia's currency market is artificial in its nature. Armenia's Central Bank, which is being attacked by both opposition and pro-government media for not doing enough to stop the sharp decline of US dollar against Armenian dram, denied the charges, saying that the main reason behind the sudden upsurge of the Armenian currency is an unexpected increase in the volume of private cash inflows from abroad. According to Central Bank officials, the increase in the volume of Armenia's export also helped to strengthen the Armenian currency.

"There was really an inflow of large amounts of sums, but the abrupt fluctuations of last two weeks need to be analyzed," Khachatrian said. He told reporters that Armenian President Robert Kocharian discussed the currency situation in the financial market with key ministries.

"We wanted to find out whether there were speculative deals that could have contributed to the unexpected fluctuations in the currency exchange rates. The official statistics would not indicate any wrongdoing that could cause volatility in the market," the Minister said.

However, Vardan Khachatrian didn't rule out that there could have been speculative deals in the financial market. According to the Minister of Finance, Robert Kocharian gave a deadline to Armenia's Ministries and Central Bank officials to find out the real reasons within a week. As a first step, the Central Bank and the government should scrutinize the activity of the private banks.

Vardan Khachatrian also warned that if the crisis in the currency market continues it would have negative impact on State revenues. "A short-term change will not affect the budget," he added.

#6 Sasun

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Posted 27 July 2004 - 02:57 PM

Even officials do not agree what happened (?)

Armenian Central Bank Again Denies Shady Deals Behind Currency Rise

www.armenialiberty.org
By Gevorg Stamboltsian

The chairman of Armenia’s Central Bank (CBA), Tigran Sarkisian, on Tuesday brushed aside government suggestions that speculative trading may have been behind the unprecedented six-month strengthening of the national currency, the dram.

“The Central Bank is being demanded not to allow speculative trading. This is nonsensical and absurd,” Sarkisian said bluntly at a news conference which he called to disprove persisting allegations about the CBA’s complicity in what some economists see as an alarming development for the Armenian economy.

The tough rebuttal seemed to be primarily addressed to Finance and Economy Minister Vartan Khachatrian who did not rule out on Friday the possibility of shady currency speculation pushing up the dram’s value dramatically. Khachatrian spoke the day after the dram’s exchange rate against one U.S. dollar soared from 520 to 490 within hours. Following an apparent CBA intervention it fell back to 512 late on Thursday and has since stabilized at 523 per $1.

The abrupt rate fluctuations prompted President Robert Kocharian to call an emergency meeting of senior government and Central Bank officials. Kocharian ordered an inquiry into the phenomenon, effectively giving more weight to the claims about currency manipulation.

Sarkisian challenged critics to come up with concrete evidence of CBA failings, questioning the competence of those alleging speculative trading. “Have the rules of [currency] sales and purchases been violated? Have there been instances of market participants flouting the law?” he asked.

“We are preparing a report for the government and the president that will carry a detailed analysis of commercial banks’ behavior during the last two weeks and whether there were legal violations,” he added.

The dram, introduced just over a decade ago shortly after Armenia became independent, has appreciated in value against the dollar and another major world currency, the euro, by approximately 6.5 percent since last December. The CBA maintains that increased inflows of cash from Armenians working abroad is the main reason for the stronger dram.

Sarkisian reiterated this view on Tuesday, saying that the amount of cash remittances carried out through Armenian banks alone rose by 46 percent to some $300 million during the first half of this year. He said a lot of hard currency has also been channeled into Armenia individually and through international wire transfer networks.

Some economists critical of the Armenian authorities say the dram’s strengthening benefits only large-scale importers and those financial speculators who can now purchase U.S. dollars at a relatively low price. They also argue that many Armenians continue to keep their savings in dollars and are dependent on hard currency remittances.

But according to Sarkisian, many more people rely on the dram. “Hundreds of thousands of people would suffer if we did not allow the dollar to lose ground,” he said. “Our main responsibility is to protect the interests of those people who have dram incomes.”

“You have to come to terms with the fact that the official legal tender in our country is the dram and should start to plan your life, calculate your revenues and expenditures in drams,” he added.

#7 hytga

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Posted 28 July 2004 - 12:32 PM

QUOTE
I don't understand why people in Armenia hesitate to rely more on Euro. The gradual move from Dollar to Euro has been the tendency in Eastern Europe and other parts of the world in recent years.


ask yourself. where does the most dollar come from? from US or Russia. so people are reliant on the $. they caon't go to the bank change the dollar to Euro and then change back to dram. it's not practical. the major source of the 'income' is in $

#8 Sasun

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Posted 28 July 2004 - 12:51 PM

QUOTE (hytga @ Jul 28 2004, 02:32 PM)
ask yourself. where does the most dollar come from? from US or Russia. so people are reliant on the $. they caon't go to the bank change the dollar to Euro and then change back to dram. it's not practical. the major source of the 'income' is in $

That is true for people who receive money. I actually meant the businesses - they conduct business in drams then convert to dollars and save. They could buy euros insted and be richer now.

#9 Armen

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Posted 28 July 2004 - 06:35 PM

Thanks for the articles Sasun.

Alpha's options for the possible implications of this fluctuations are very true for a normal economic model. But I still don't think we gonna see them. At least not on a massive scale, since Armenia is not a nomal economy.

When September 11th happened the whole world was feeling shocks except Armenia. When in 2002 the oil prices when down everybody thought that the same will happen in Armenia. Nope. Nothing. Actually, the price went up as if the country was on different planet.

#10 Harut

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Posted 30 July 2004 - 01:27 AM

pardon my economics' ignorance, but wouldn't strong valuta also mean higher demand for it?
so, instead of assuming that the reason for dram's increase in value against dollar is the inflow of dollar, isn't it also possible that the reason is that exports are increasing? wouldn't that also prompt for demand for dram, thus, increase of its value? would that actually be a bad thing?

#11 Armen

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Posted 30 July 2004 - 08:23 AM

Harut, that senario would mean that Armenia is an effecitve economy, which, sadly, is not the case. From one point of view that could have happened. The exports could increase parrallel with the dollar inflow and bring to dram appreciation. However, none of experts metioned export volume increase in their analysis. Moreover, the speculations in exchange market or money laundering were metioned specifically by an independent expert and finance minister. If the reason was the export increase Robert Kocharian would be on TV the next evening announcing a major economic victory. I'm exagerating here smile.gif He never speaks other than on elections. Nonetheless, the people of his team would highlight their success if that was the case. At present, Kocharian has ordered in financial investigation to market activities of some banks to find out the reason.

#12 alpha

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Posted 02 August 2004 - 04:09 PM

Harut,
Appreciation of dram will play a positive role only when it’s accompanied by corresponding the productivity of Armenian economy, otherwise Armenian industry will be even more priced out of international markets. Steep fluctuations in currency in a short period of time is mostly a result of Central Bank’s inefficiency, which failed to stabilize the Dram. I strongly believe that Tigran Sargsyan should either be dismissed from his position or have answers about inactivity of Central Bank. Steep fluctuations in currency just add an additional risk to doing business in Armenia. Why would someone do business in a country that is filled with political risk, currency risk, geopolitical risk, and many other risks. Business likes stability, which gives the owner an opprotunity to plan ahead and concentrate on his core competencies. Imagine if a businessman buys an insurance against all the risks listed above, the cost of doing business would be astronomical.

#13 Armen

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Posted 05 August 2004 - 09:27 PM

Eurasianet Organization
Aug 5 2004

CURRENCY FLUCTUATION CAUSES CONCERN IN ARMENIA
Haroutiun Khachatrian: 8/05/04

Rapid exchange-rate fluctuation, in which the Armenian currency has
significantly strengthened against the US dollar, is a source of
concern in Armenia. Many local economic observers suspect the
country's currency market is being manipulated by speculators.

Following its introduction in 1993, the Armenian currency, the dram,
steadily declined in value against the US dollar - until this spring.
So far in 2004, the dollar has lost roughly 7 percent of its worth
versus the dram. Whereas early this year the exchange rate stood at
about 563 drams to the dollar, the rate is now hovering at about
520-to-one.

Many economists in Yerevan say there is no sound basis for the dram's
appreciation, sparking suggestions that artificial pressure is
responsible for the sudden currency rate change. Most believe that
speculators are responsible for the recent fluctuation. The fact that
during a three-day span in mid July the exchange rate went from 520
drams to one US dollar to 495-to-one has helped fuel such suspicion.
The exchange rate shortly thereafter returned to the 520-to-one
level.

Concern about the exchange rate reached such a point that President
Robert Kocharian convened a special session of top government
economic officials to discuss ways to stabilize the dram. Meanwhile,
Central Bank officials said the dram's appreciation is the result of
a dramatic rise in the influx of US dollars into Armenia. According
to the bank, there are three sources for rapid growth of dollars
circulating in the Armenian economy: an increase in exports; the
growth of the tourist industry; and significantly more cash
remittances coming into Armenia from Armenians living and working
abroad. Remittances have reportedly jumped 40 percent so far this
year over the same period in 2003.

Some economists now suggest Armenia is suffering from a form of
"Dutch disease" in which a country's economy is overly dependent on
one export commodity, ultimately creating unfavorable exchange rates
that cause other economic sectors in the country to stagnate. In most
cases, those countries that have suffered from "Dutch disease" are
oil-and-gas exporters. In Armenia's case, the country's main export
appears to be skilled workers, who find work abroad and then ship
back a portion of their earning to relatives at home. [For background
see the Eurasia Insight archive].

Central Bank chairman Tigran Sargsian, in statements concerning the
exchange rate fluctuation, has downplayed the possibility of
manipulation by speculators. He also has expressed a preference for a
hands-off approach by the Central Bank, adding that, in his view, the
dram's value is not near a point where it could frustrate exports.

The Central Bank position has been attacked by some economists. In an
interview published July 30 on the Iravunk web site, economist Eduard
Agajanov accused the Central Bank of negligence. In taking no action
on the exchange rate, the bank "forgets that the main goal of central
banks all over the world is to stabilize the currencies of their
countries," said Agajanov, who formerly headed the State Statistics
Committee.

Agajanov said there were several options open to the Central Bank.
One way to prevent such sudden exchange rate fluctuations, he added,
would be for the Central Bank to increase the money supply to counter
the influx of dollars.

The dram's sudden and unexpected rise could benefit the government.
The 2004 state budget was calculated on the basis of a dram-dollar
exchange rate in the range of 580-to-one. If the rate remains at
present levels, the government may have a far easier time keeping
spending levels within budgetary projections.

The flip side is that dollar's loss in value has somewhat damaged
commerce inside the country, and has eroded the savings of many
Armenians. This is because many Armenians have a greater level of
trust in the dollar than in the national currency. A significant
number of business transactions in the country are calculated in
dollars, while roughly two-thirds of Armenian bank account holders
maintain their savings in the US currency. The drop in the dollar's
value has caused many entrepreneurs to incur losses in recent months.

Some economists, including Agajanov, worry that the lack of Central
Bank action to stabilize the exchange rate may be setting Armenia up
for financial upheaval down the road. They point to the fact that the
amount of remittances coming into Armenia could fall just as fast as
they have risen in recent months, rendering it impossible to rely on
the dram's current relative strength.

Agajanov predicted that the dram is headed for a crash. "One fine
day, when this [present-day] agitation subsides, the rate of the dram
will suddenly plummet, with all the negative consequences that will
ensue," he said.

Editor's Note: Haroutiun Khachatrian is a Yerevan-based writer
specializing in economic and political affairs.

#14 gamavor

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Posted 03 September 2004 - 01:39 AM

Maybe it is not bad idea to make the Euro the reserve curency of the National Bank.

http://europa.eu.int.....-All Subjects

Edited by gamavor, 03 September 2004 - 09:27 PM.


#15 Armen

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Posted 23 October 2004 - 12:23 AM

Institute for War and Peace Reporting
Oct 22 2004

CURRENCY FEARS IN ARMENIA

Worries of economic fallout as the dram surges against the country's
unofficial second currency - the US dollar

By Naira Melkumian in Yerevan

The first sharp strengthening of the Armenian dram against the US
dollar in seven years is raising fears of economic damage, in a
country where people depend not only on the national currency, but the
greenback too.

Current official rates are about 512 drams to the dollar, while the
market rate is about 505 drams. Just a few months ago, a dollar
fetched 575 drams.

Finance and Economics Minister Vardan Khachatrian has tried to
reassure the public, saying measures are being taken to reduce
negative effects on Armenia's state budget.

However, many are already feeling the pinch, primarily exporters and
those depending on dollar transfers from relatives working abroad as
migrant labour.

`It is a well-known fact that a considerable part of the population
subsists on money sent by relatives working abroad,' Yerevan resident
Rita Sarkisian, 49, told IWPR. `Out of the 200 dollars that my husband
sends us from Krasnodar [in southern Russia], my family loses about 20
dollars every month, and that's a large sum of money considering that
prices of consumer goods have gone up.'

Similar stories can be heard anywhere in Armenia, where up to one
million people, or more than a quarter of the population, have
emigrated, according to official statistics. Though most have gone to
Russia, the cash of choice remains the dollar.

Central bank head Tigran Sarkisian explains the strengthening of the
dram by several factors, both internal and external. `Primarily, it is
the 46 per cent growth of private transfers via the banking system
alone in the first half of 2004, an increase in exports by 40 per cent
and a growth in the number of tourists by 24 per cent, which has
brought about a wide-scale influx of foreign currency into the
country,' he said.

Economic growth averaging 10 per cent annually in recent years has
also served to boost the dram.

Sarkisian told a parliamentary debate that Armenia was entering a new
stage of economic development, which would be accompanied by rising
incomes and, inevitably, a strengthening of the dram. `It is
impossible to have rapid economic growth, productivity growth and yet
have the devaluation of the national currency,' he said.

Other experts say it is external rather than internal economic factors
that have made the dram so strong.

Former statistics minister Eduard Agajanov told IWPR that the central
bank's picture of a booming Armenia was unrealistic. `One gets the
impression that Armenia has suddenly turned into a Mecca for tourists,
and that the Armenians abroad have all got rich overnight and sent
their money to relatives in Armenia,' he said.

`Armenia is not one of the rich and well-developed countries that are
able to ensure a strong and stable national currency thanks to
internal growth and development alone, however high those might be,'
argued Karine Gevorkian, an economics professor. She pointed to
tendencies on the international financial markets, which are boosting
prices, as well as economic indicators in Russia, Europe and the
United States, as the reason why there has been an influx of foreign
currency to Armenia.

Sarkisian said that a liberalisation of foreign currency rules in
Russia, where there is a large Armenian community, was important. For
example, the limit on cash exports from Russia has been raised to
10,000 dollars.

Now Armenia faces a slowing of exports, Agajanov said. The foreign
trade deficit this year amounts to 285 million dollars, with imports
close to double the volume of imports.

Partly responsible, Agajanov said, are fuel, sugar and grain
importers, who benefit from the currency strengthening. This view was
backed by Areg Gukasian, director of the Avan salt works, who told
IWPR that `the lowered rate is advantageous only for importers who
reap super profits, while

the exporters are suffering serious losses.' He said his plant had had
suffered a 25 per cent drop in income.

However, the head of the permanent commission for financial, credit,
budget and economic issues at the National Assembly, Gagik Minasian,
told IWPR that any business could profit, `It would be wrong to paint
the situation in dark colours only, especially since entrepreneurs can
take advantage of the situation to import equipment on beneficial
terms so as to produce goods that are competitive both on the domestic
and foreign markets.'

He advised exporters to do their transactions in drams or in foreign
currencies other than the dollar, and suggested that people making
private transfers could do so in Russian roubles. However, several
commercial banks that handle money transfers told IWPR that not all
branches of Armenian banks in Russia carry out rouble transactions.

The economic row is taking on political dimensions.

`I am convinced that the situation at the foreign currency market
suits very well a group of people close to those circles that
influence the currency exchange rate,' Agasi Arshakian, a
parliamentary deputy from the opposition National Unity party, told
IWPR. `As usual, very few bother to think about ordinary people.'

Arshakian blamed the central bank for not intervening to keep the
dollar stable.

Economist Levon Danieliants also believes that the central bank should
have intervened, `Above all, they could have done an elementary
monetary emission and purchased dollars cheaply, and thus increased
their foreign currency supplies.'

However, central bank head Sarkisian argues against interventionist
policies, warning, `artificial stimulation of exports is a dangerous
phenomenon that can lead to a crisis.

`If the state begins subsidising production, it will become a heavy
burden for the tax-payer, and after the subsidies are over, Armenian
industry will become unable to compete.'

Sarkisian said the bank's chief concern was to keep inflation
contained. According to the official data, consumer prices in
September were 1.3 per cent lower than in December last year.

Claims that inflation is being held in check are viewed with
scepticism by many ordinary shoppers.

`Personally, I haven't felt any price containment, because most basic
foodstuffs such as bread, butter and meat have become more expensive,

and fruit was very expensive throughout the summer season,' said Alla
Hairapetian in the town of Sevan.

Experts believe that the government is not unhappy about the
strengthening dram. The authorities would like to see an increase in
the amount of savings held in drams, thus reducing the influence of
the dollar and the shadow economy. Whether Armenians are ready to put
their trust in the dram or not is another question.

Economist Karine Gevorkian admitted that she preferred to keep her own
savings in dollars and euro, while businessman Areg Gukasian said he
thought the dram's rise did not reflect any real strengthening of
domestic finances.

`It would be more accurate to call the situation a depreciation of the
dollar, not a strengthening of the dram.'

Naira Melkumian is a freelance journalist in Yerevan.

#16 gamavor

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Posted 11 November 2004 - 11:52 PM

Two months ago the Euro - US Dollar ratio was roughly 1=1.16. Right now is 1.29.
While the weaker dollar (according to some) is good for the American economy (i doubt that in the long run) dollar - client countries such as Armenia, who use the dollar to buy goods from abroad and as well as for international payments, are in dare situation.

Just few months ago, hypothetically if Armenian National Bank had switched to or at least converted part of her hard currency reserves into Euro, right now they would have been able to buy 20% more goods or services.

#17 Armen

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Posted 12 November 2004 - 12:42 AM

Gamavor, the only problem is that U.S. can kick Europe's ass any moment they want becasue Europe is a weaker entity. Like they can provoce another Balkan drama and Euro will go down. That's why it is always wise to trust dollars. smile.gif

#18 gamavor

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Posted 12 November 2004 - 12:47 AM

Yes Armen, I understand this, I also understand why Putin likes Bush. All I'm saying is 50/50.

"God has retained love for himself but has shared wisdom and might with Lucifer and Ahriman". wink.gif

#19 Armen

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Posted 12 November 2004 - 01:06 AM

smile.gif Yes, that could work. They sold the gold reserve some time ago. Not sure how much was that but they could well sell it for Euro. But Armenia's balance of payments is very fragile. It depends on outflow-inflow too much. Our current account is more active than capital account and this kind of games may result in very risky fluctuations of Dram. I am not sure Armenia's CB has the professional capacity to analise future risks with very much precision. They may be just scared to do this kind of stuff smile.gif

#20 hytga

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Posted 12 November 2004 - 11:39 AM

QUOTE
Yes, that could work. They sold the gold reserve some time ago. Not sure how much was that but they could well sell it for Euro. But Armenia's balance of payments is very fragile. It depends on outflow-inflow too much. Our current account is more active than capital account and this kind of games may result in very risky fluctuations of Dram. I am not sure Armenia's CB has the professional capacity to analise future risks with very much precision. They may be just scared to do this kind of stuff

you're right after all it's not a monopoly game. the action would be too risky. they don't know what the next pair of dice could bring




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