Monday, December 15 2014 17:39
On Dec 15 Central Bank started reducing daily interventions in interbank currency market amid continuous AMD devaluation
ArmInfo. On Dec 15 the Central Bank of Armenia started reducing the amount of daily interventions in the interbank currency market, having sold on Dec 15 a total of $4 mln at the average exchange rate of 494.46 AMD/$1, with the cut-off price being 493 AMD/$1.
Since the launch of the daily interventions, i.e. from Dec 8 through Dec 15, the CBA sold USD 34mln to the participating banks - USD 6mln daily on Dec 8-12 and USD 4mln on Dec 15. The CBA press service has told ArmInfo that over this period the average exchange rate rose from 456.63 to 494.46 AMD/$1 and the cut-off price grew from 455 to 493 AMD/1 USD.
On Dec 15 before 2 pm, the average AMD/USD exchange rate in the retail currency market was 480 AMD/$1, AMD/EUR exchange rate - 604 AMD/1EUR, which jumped to 491 AMD/$1 and 611 AMD/1EUR, respectively, by 5 pm.
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. In particular, during the first week (8- 12 December) the daily interventions will be $6 mln. Afterwards, the daily interventions will gradually be reduced depending on demand and will be brought to zero by the end of the year.
Chairman of the CBA Artur Javadyan has recently told journalists that these short-term daily interventions are not a deviation from the 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 CBA'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.
As of December 15, the AMD devaluation against USD is still going on in the retail currency market of Armenia despite the daily interventions of the CBA. Over 20% devaluation has been fixed since October. At the moment (5 pm), the exchange rates at swap bodies are as follows: 487/495 AMD/1 USD, 597/625 AMD/1 EUR, 8.15/8.75 AMD/1 RUR. The optimal rates at the banks of Armenia before 2 pm were as follows: USD was purchased and sold for 480 AMD (ceiling and lowest prices), EUR was purchased and sold for 600 AMD, RUR was purchased for 8.1 AMD (ceiling). The lowest rate of sale was 8.5 AMD. Following the CBA's intervention, the optimal exchange rates rose by 10 points. At NASDAQ OMX Armenia, from June through December 15, foreign exchange operations amounted to $396.6 million drams with the exchange rate growing from 407.14 to 461 AMD/1 USD. Almost no transactions were registered after December 1 (only 100 thsd USD on Dec 10). The transactions in November alone totaled nearly $117 million drams. On 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, over the period from 1 to 15 December, the stock exchange registered transactions only on Dec 1 ($3.5 million) and Dec 10 ($100 thsd), with no deals for the following days.
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