Tuesday, December 9 2014 18:39
Armenia's Central Bank is going to sell $6mln a day on the inter-bank forex market till the end of 2014
ArmInfo. Armenia's Central Bank is going to sell $6mln a day on the inter-bank forex market till the end of 2014.
Chairman of the CB Artur Javadyan told journalists on Tuesday that they will gradually reduce their daily interventions depending on demand and will bring them to zero by the end of the year.
"These short-term daily interventions are not a deviation from our floating rate policy. They are much smaller than the market, so, we are not planning to shape the rate," Javadyan said.
He said that the CB's interventions are supposed to stabilize the rate. Javadyan gave the key factors that caused AMD's drop: economic growth in the United States and no more quantitative easing by the Federal Reserve System. "This resulted in anticipation of higher interest rates and outflow of capital from developed countries to the US. As a result, developed countries registered slowdown in their economies growths and drop in their currencies. I mean the EU, Switzerland, China, Brazil, the UK, Japan and India," Javadyan said.
He added that along with the given impact on the CIS, the situation has deteriorated due to the regional geopolitical problems and reduction in oil prices. These factors have resulted in sharp reduction of economic growth rates in Russia and the ruble devaluation, which has increased the pressure on the CIS countries in terms of export and money transfers by reducing the inflow of US dollars.
"That impact has also affected Armenia, where the economic entities have started converting their available cash and credit funds into foreign exchange, hoping to receive additional benefits in AMD. The Central Bank immediately issued a warning about the high risks in such transactions. The CBA said that non- experts couldn't estimate those risks correctly. The world practices show that the panic results in the growth of the purchase and sale margin in the foreign exchange market and in big losses suffered by the ordinary citizens", stressed Javadyan.
Nevertheless, he said that this situation cannot last long, because Armenia is conducting a reasonable macroeconomic policy that makes the inflation, budget deficit, foreign reserves, foreign debt and the banking sector indices controllable and stable. "The Central Bank is doing everything possible to maintain that stability by means of its monetary tools", said Javadyan.
According to the CBA's statement dated 8 December 2014, on 8 December, the Central Bank of Armenia launched daily interventions to restore the balance in the exchange market and the soften currency fluctuations. The interventions will last till the end of 2014. The CBA will continue announcing the ceiling of daily sale amounts till the end of the year to normalize the situation in the exchange market of Armenia. According to the source, the CB will be publishing foreign exchange operations to ensure transparency in the financial market of Armenia. The daily intervention amounts will be reduced gradually until the national currency exchange rate is balanced. The goal is to reduce the CB's influence on formation of the national currency exchange rate.
On December 9, in the retail market of Armenia the AMD/USD exchange rate exceeded 461 AMD/1USD with over13% devaluation for the last 2.5 months. As of 4:40 pm, the exchange rates at swap bodies were as follows: 460/463 AMD/1 USD, 564/570 AMD/1 EUR, 8.45/8.50 AMD/1 RUR. The optimal rates at the banks of Armenia were as follows: USD was purchased for 456 AMD (ceiling), EUR - 561 AMD, RUR - 8.42 AMD. The lowest rates of sale were as follows: 458 AMD/1 USD, 569 AMD/1 EUR, 8.54 AMD/1 RUR. At NASDAQ OMX Armenia, from June through December 9, foreign exchange operations amounted to $396.5 million drams with the exchange rating growing from 407.14 - 438.62 AMD/1 USD. No transactions were registered after December 1. The transactions in November alone totaled nearly $117 million drams. Last week (1-5 Dec), interbank market of foreign exchange operations registered a record-breaking indicator - $59.3 million, which resulted in a 442.42 AMD/1USD exchange rate. In this light, the stock exchange started the week with transactions in the amount of $3.5 million (1 Dec) with no deals for the following days.
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