Thursday, December 18 2014 17:30
Armenia's Central Bank tries to sell $4mln but nobody buys it
ArmInfo, On Dec 18 Armenia's Central Bank tried to sell $4mln on the inter-bank forex market but none of the banks bought it. No forex transactions were registered on the exchange on the same day, with the average offer rate being 548.8 AMD/1 USD. It was the first CB intervention since Dec 8.
Dec 8-17 the CB sold $42mln: $6mln a day Dec 8-12 and $4mln a day Dec 15-17. The average rate during the period grew from 456.63 AMD/1 USD to 570.58 AMD/1 USD, while the cut-off price grew from 455 AMD/1 USD to 567.65 AMD/1 USD.
On Dec 18 on the retail forext market AMD/USD exchange rate dropped from 570 AMD/1 USD to 485 AMD/1 USD, AMD/EUR rate from 712AMD/1 EUR to 586 AMD/1 EUR, AMD/RUR rate from 8.6 AMD/1 RUR to 8 AMD/1 RUR.
Market players say that the key reason AMD is so volatile is speculations on the market. When the rate was growing people rushed to buy USD and EUR but now that the rate has started to drop, they have rushed to sell what they have bought so as not to lose money if the rate continues to fall. In the meantime, some exchange offices accept only limited sums, while some bank branches accept currency only upon application approved by their head offices.
On Dec 17 Chairman of the CB Artur Javadyan said that AMD has undergone hyperdevaluation caused by panic and speculations. He said that Armenia's banking system has no lack of foreign exchange and can inject liquidity if need be. "We are controlling the situation and are able to curb inflation. Our key goal is to ensure stable prices," Javadyan said.
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.
From Oct till Dec 17 AMD dropped against USD by almost 45%. On Dec 18 it rose by 18%. As a result, on Dec 18 AMD/USD buying/selling rates made up 460/510 AMD/1 USD, AMD/EUR rates 528/643 AMD/1 EUR, AMD/RUR rates 6.8/9.0 AMD/1 RUR.
On Dec 18 in banks the maximum buying rates and the minimum selling rates coincided: 510 AMD for 1 USD, 620 AMD for 1 EUR, 8.3 AMD for 1 RUR. NASDAQ OMX Armenia registered no forex transactions, with the total amount of forex transactions carried out from June till Dec 17 being $396.7mln.
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