Tuesday, May 22 2012 19:11
In Armenia's retail currency market AMD/USD exchange rate rises beyond psychological limit of 400 AMD/1USD
ArmInfo. On May 22, Tuesday, in Armenia's retail currency market the average AMD/USD exchange rate rose beyond the psychological limit of 400 AMD/1USD and reached 402 AMD/1 USD. The currency market experts explain this phenomenon by the growth in foreign exchange demand that has been observed since early May, but was satisfied weakly via the stock exchange and interbank. The Central Bank's non-intervention over this period is most likely explained by the reduction in gross foreign reserves. Against this background, an adequate reaction to the exchange rate growth is a little bit late. After the May 21 zero transactions on the stock exchange, the May 22 transactions totaled 20 mln USD, to all appearances, due to the Central Bank's intervention. But even this figure has failed to restrain the upward trend, and the AMD/USD exchange rate rose from Friday's 399.5 to 401.95 AMD/$1. According to the statistics, since May 17 the market has experienced something like "calm before the storm", i.e. the players have been displaying a wait-and-see position in both the interbank market and the stock exchange.
Experts think that the AMD/USD exchange rate growth is connected with the extraordinary demand for foreign exchange by the importers, who have laid down exclusive standards before the banks, and the intervention of the Central Bank will most likely be able to satisfy these appetites. In this respect, one should not expect any further growth of the exchange rate within the short-term outlook.
It is noteworthy that before the start of the upward trend in the currency market in early May, when the average exchange rate was 392 AMD/1USD, in Q1 2012 the gross foreign assets of the Central Bank dropped by 9%, and the net foreign assets of the CBA dropped by 16%.
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