Central Bank short-term intervention hardly help slow down devaluation of national dram

ArmInfo. Devaluation of the national dram continues despite the activity in the stock exchange and inter-bank markets with probable intervention of the Central Bank in the current week on both the stock exchange (Wed, Fri) and forex interbank market  (Tue, Fri). 

On November 30 - December 4, the interbank forex market experienced a 19.5% growth of transactions amid over $5 million-worth transactions on NASDAQ OMX Armenia after complete passivity of the previous week.  As a result, the AMD/USD exchange rate rose from 473 AMD/$1 to 483 AMD/$1 in early November. Afterwards, due to CB's intervention, the national currency appreciated to 481 AMD/1USDon Nov 26 and began to devaluation since November 27 to  483 AMD/1USD on November 30.  As of Dec 2. the dram devaluated reaching 485 AMD/1USD.  This actually made the CB to launch intervention and appreciate the national dram at 484 AMD/1USD. On Dec 4.  The following two larger interventions during the last two days stabilized the exchange rate at

According to the CB press office, on November 30 - December 4, NASDAQ OMX Armenia was active on Wednesdya and Friday - $1.9 million and $3.450 million, respective.  The transactions on the interbank forex market totaled $3.350 million and $4 million on Tuesday and Friday, which means that the CB made interventions of those very days.

The transactions of the interbank forex market past week totaled $9.350 million, forming the average exchange rate at the level of 484.08 AMD/1USD in average.  The transactions on NASDAQ OMX Armenia for the week totaled $5.350 million forming the exchange rate at 484.85 AMD/1USD. The latest large interventions of the Central Bank were on November 13 - $19.6 mln, on October 2 - supposedly $6 mln, on September 19 - $22.2 mln and August 28 - $95 mln.

The source says that on November 30- December 4, on the intrabank currency market (transactions with customers) the banks bought $91.4 mln (49% drop versus the previous week) at the average exchange rate of 482.13 AMD/$1, and sold $100.2 mln (37% growth) at the average exchange rate of 484.47 AMD/$1. In the meantime, the banks bought 8.1 mln EUR (up 87%) at the average exchange rate of 512.98 AMD/1EUR, and sold 10.8 mln EUR (up 14.6%) at the exchange rate of 515.87 AMD/1EUR.  The banks also bought 1.022 bln RUR (up 12%) at the average exchange rate of 7.18 AMD/1RUR and sold 516.9 mln RUR (up 54%) at the exchange rate of 7.28 AMD/1RUR.

During the previous week (November 23-29) the Armenian banks provided AMD loans worth 36.3 bln AMD and USD loans worth $41.3 mln. As compared with the previous week (November 16-22), AMD loans decreased by 21.6% and the ones in terms of USD rose by 32.1%.  

To recall, during the last months of 2014 the forex market of Armenia registered a sharp rise of the AMD/USD exchange rate - over 570 AMD/1USD. From October through December 17, 2014, AMD depreciated by almost 45% in the retail forex market of Armenia, then it appreciated by 25% on Dec 18-20, staring depreciating against on Dec 22.  On Dec 27, the average AMD/USD exchange rate was 470 AMD/$1, the AMD/EUR exchange rate was 574 AMD/1EUR, the AMD/RUR exchange rate was 8.7 AMD/1RUR.  Over 2014, NASDAQ OMX Armenia registered transactions worth a total of $744.5 mln, with the biggest amount falling on November ($117 mln). Over the year the exchange rate on NASDAQ OMX Armenia rose from 407.14 to 560 AMD/$1 (on Dec 17 the exchange rate rose by 22%), dropping to 470 AMD/$1 by Dec 27. In 2014, in the retail forex market of Armenia, the AMD depreciated against USD by 40%, with the maximum indicator (570 AMD) fixed on Dec 17 and the minimum (406 AMD) registered in July.

Within 11 months of 2015, in the retail forex market AMD depreciated from 477 to 483 against USD in average; from 571.5 to 512 against EUR, at the same time depreciating from 8.2 to 7.4 against RUR. As of Dec 4, the national currency depreciated to 484 AMD/1USD in average, 528 AMD/1EUR, and appreciated against RUR - 7.2 AMD/1RUR). The drams has depreciated amid falling foreign trade (over 20%): import - nearly 27% and expert - over 2%.  Money transfer to Armenia fell more than by 30% amid low solvency of the population and low economic activity I the country.