National dram appreciates, as Central Bank makes frequent interventions in forex inter-bank market

ArmInfo. Central Bank had to launch regular interventions nearly every week this month to prevent the scenario of the last December.  This week, the CB participated in the currency operations on both NASDAQ OMX (on Friday) and the forex inter-bank market (Monday-Thursday).  On Dec 14-18, the interbank forex market halved the transactions amid amid nearly 3-fold growth of transactions on NASDAQ OMX Armenia.  As a result, the AMD/USD exchange rate rose from 483 AMD/$1 to 485 AMD/$1 on November 30- December 2 and made up 484 AMD/$1 on December 4 due to CB's interventions. Then, the dram began to depreciate against and made up 486 AMD/1USD on December 10. Afterwards, the CB launched weekly interventions and fixed the rate at 482 AMD/1USD on December 14-18. 

According to the CB press office, on December 14 through 18, NASDAQ OMX Armenia was active only on Wed - $50,000 and on Fri - $2.9 mln due to CB's interventions, which fixed the exchange rate at 479.07 AMD/1USD. The interbank forex market operated throughout the week not without interventions of the CB making transactions for a total of $8.4 mln for the week and forming the average exchange rate at the level of 483.04 AMD/1USD. The latest large interventions of the Central Bank were on December 11 - more than $6 million, 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 December 14-18, on the intrabank currency market (transactions with customers) the banks bought $110.8 mln (14.6% growth versus the previous week) at the average exchange rate of 482.39 AMD/$1, and sold $123.3 mln (29.5% drop) at the average exchange rate of 484.20 AMD/$1. In the meantime, the banks bought 10.2 mln EUR (up 62%) at the average exchange rate of 524.01 AMD/1EUR, and sold 10.8 mln EUR (weekly growth 3%) at the exchange rate of 531.12 AMD/1EUR. The banks also bought 1.2 bln RUR (up 33%) at the average exchange rate of 6.81 AMD/1RUR and sold 593.7 mln RUR (43% growth) at the exchange rate of 6.92 AMD/1RUR.

During the previous week (December 7-13) the Armenian banks provided AMD loans worth 51.6 bln AMD and USD loans worth $54.4 mln.  As compared with the previous week (November 30- December 6), AMD loans increased by 3.4% and the ones in terms of USD rose 17.3%.  

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. In the course of the 11 months of 2015, in the retail forex market AMD appreciated from 477 to 483 against USD; from 571.5 to 512 against EUR, at the same time depreciating from 8.2 to 7.4 against RUR.

The average USD/AMD exchange rate on Dec 11 made up 485 AMD/1$. The national currency depreciated against EUR (530 AMD/1EUR) and appreciated against RUR (7.1 AMD/1RUR). The December 14-18 intervention of the Central Bank fixed the dram at 482AMD/1USD, 523AMD/1EUR, and 6.8AMD/1RUR. Foreign trade turnover fell over 20%:  import - 27% and export - 2%.  Money transfers to Armenia fell more than 30% amid low consuming capacity of the population and low economic activity in the country.