Central bank of Armenia continues dampening AMD devaluation by weekly interventions

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 18 through 22, NASDAQ OMX Armenia was not active. The inter-bank forex market operated throughout the week more actively on Thursday (5.350 mln USD) and most possibly with intervention of the CB making transactions for a total of $9.1 mln for the week and forming the average exchange rate at the level of 486.91 AMD/1USD.  To note, the first large intervention of the Central Bank in 2016 was on January 15-$32.4 mln 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 18-22, on the intra bank currency market (transactions with customers) the banks bought $67.9 mln (17% growth versus the previous week) at the average exchange rate of 484.81 AMD/$1, and sold $74.1 mln (18.7% decline versus the previous week) at the average exchange rate of 487.29 AMD/$1. In the meantime, the banks bought 11.4 mln EUR (up 72%) at the average exchange rate of 526.19 AMD/1EUR, and sold 17.3 mln EUR (weekly growth 15%) at the exchange rate of 530.30 AMD/1EUR. The banks also bought 1.1 bln RUR at the average exchange rate of 6.01 AMD/1RUR and sold 380.1 mln RUR (14% weekly decline) at the exchange rate of 6.15 AMD/1RUR.

 

During the previous week (January 11-January 17) the Armenian banks provided AMD loans worth 38.7 bln AMD and USD loans worth 32.8 mln.  As compared with the previous week (December 21- January 10), AMD loans decreased by 72.4% and the ones in terms of USD by 64.4%.

 

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. Since 2016 despite weekly interventions of Central Bank on the retail foreign exchange market 

of Armenia, AMD start weakening again, devaluating against USD to 487AMD/1USD by January 22. At the same time AMD strengthened against EUR to 528 AMD/1EUR and continued to strengthen against Ruble to 6.1 AMD/1RUR.