Central Bank continues interventions while experts forecast AMD depreciation to 550 AMD/$1 by the end of 2016

 

According to the independent experts of the market, in the conditions of deepening financial-economic crisis in Russia, decline of oil prices and especially metallurgic raw material prices, which are one 

of the main export products of Armenia, dram may weaken against USD to 540-550 AMD/1USD till the end of 2016. 

 

According to the CB press office, on January 11 through 15, NASDAQ OMX Armenia was not active. The inter-bank forex market operated throughout the week more actively on Tuesday and Wednesday, with 

large intervention of the CB on Friday (32.4 mln USD)making transactions for a total of $36.7mln for the week and forming the average exchange rate at the level of 482.78 AMD/1USD. To note, this is the first large intervention of the Central Bank in 2016, while in 2015 large interventions were on August 28 - $95 mln, September 19 - $22.2 mln, November 13 - $19.6 mln and smaller ones on December 11 - more than $6 million and on October 2 - $6 mln. 

 

The source says that on January 11-15, on the intra bank currency market (transactions with customers) the banks bought $57.7 mln (57% decline versus the previous week) at the average exchange rate of 

483.47 AMD/$1, and sold $91.4 mln (33% decline versus the previous week) at the average exchange rate of 485.54 AMD/$1. In the meantime, the banks bought 6.6 mln EUR (down 51%) at the average exchange rate of 524.20 AMD/1EUR, and sold 14.8 mln EUR (weekly decline 21%) at the exchange rate of 529.55 AMD/1EUR. The banks also bought 1.1 bln RUR (weekly decline 15.4%) at the average exchange rate of 6.33 AMD/1RUR and sold 443.5 mln RUR (23% weekly decline) at the exchange rate of 6.40 AMD/1RUR. 

 

During the previous week (December 21-January 10) the Armenian banks provided AMD loans worth 140.4 bln AMD and USD loans worth $92.1 mln.  As compared with the previous week (December 14- December 20), AMD loans increased 3-fold and the ones in terms of USD 2-fold.

 

To recall, during 11 months of 2015 on the retail foreign exchange market of Armenia AMD weakened against USD from 477 to 483 AMD/$1 and strengthened against EUR from 571.5 to 512 AMD/1EUR and against Russian ruble from 8.2 to 7.4 AMD/1 RUR. Continuing signs of depreciation in December weakened AMD against USD to 485 AMD/$1 by December 11, against EUR to 530 AMD/1EUR, while AMD strengthened against Russian Ruble to 7.1 AMD/1RUR. But following almost daily interventions of Central Bank between December 14-28 led AMD to strengthening against USD to 482 AMD/$1, against EURO-to 529AMD/1EUR, against Russian Ruble to 6.9 AMD/1 RUR. AMD depreciated amid decline 

of foreign trade turnover (more than 20%), while import dropped more significantly (almost 27%) than export (higher than 2%) as well as decline of transfers inflow to Armenia more than by 30%, and this 

happened in conditions of low buying capacity of the population and low economic activity in the country. During the first half of January 2016 on the retail foreign exchange market of Armenia dram depreciated against USD to 485 AMD/$1, against EURO to 530 and strengthened against Ruble to 6.4 AMD/1RUR.