Friday, December 5 2014 14:04
Armenian Central Bank reduces import coverage reserves
ArmInfo. Central Bank of Armenia has reduced import coverage reserves from 4.5 months to 4 months, Teresa Daban Sanchez, IMF Resident Representative in Armenia, told ArmInfo.
Ms. Sanchez said this indicator may change depending on the situation in the market. International reserves are adequate if they can cover at least three months' worth of imports. In this light, the Armenian CB's reserves are sufficient to ensure financial stability and maintain prices in the country.
IMF Resident Representative said the Central Bank accumulates its reserves to stabilize the plummeting of the exchange rate. The CB buys dollars when the exchange rate appreciates, and sells, when the exchange rate depreciates. However, Armenia may face additional risks due to external shocks, mainly, the situation in Russia. Ms. Sanchez said the problem is that Russia has changed its monetary policy and the ruble began sliding. The Russian Central Bank has shifted to a floating rate policy and now markets are verifying the real rate of the ruble, she said. In such situation, the IMF is ready to render the necessary assistance, but the Central Bank of Armenia does not need any help so far. Ms. Sanchez believes that Armenia has sufficient exchange rate adjustment buffers.
Foreign exchange operations for $393 million were registered at the Armenian stock exchange in Jun-Nov 2014, including $117 million in November alone. Most of the operations were the Central Bank's exchange rate interventions to soften the exchange rate fluctuations. On 5 December, the exchange rate in the retail currency market of Armenia averaged 445.5 AMD per US$1. The AMD/USD exchange rate has depreciated nearly by 10% in Jun-Nov 2014.
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