Minister of EEC: Introduction of a single currency in the EEU at the current stage may have negative economic consequences

ArmInfo. Tatyana Valovaya, Member of the Board (Minister) in charge of the main directions of integration and macroeconomics of the Eurasian Economic Commission, believes that introduction of a single currency in the EEU at the current stage may have negative economic consequences. Ms. Valovaya made such statement at the video-bridge Moscow-Astana-Yerevan on February 8.  

She urged active efforts to bolster the cooperation in the macro-economic sector and use of national currencies in mutual settlements.

"Besides the legal opportunities, we should create also economic stimuli for making payments in the national currencies," the minister said. In her words, it is necessary to create conditions to make settlements in national currencies more profitable for economic actors than in USD or EUR.  She said that at the request of the prime ministers of the EEU countries, the Commission has prepared a report on upgrading the sustainability of the EEU economies and enhancing the cooperation in the macro- economic currency sector.

Tatyana Valovaya believes that the devaluation of the national currencies in the EEU countries since the end of 2014 has been economically substantiated, in particular, the oil factor and the slackening economies of the key partners have had a dramatic impact on the situation.

The documents for establishment of the Eurasian Central Bank with a transition to the single currency by 2025 were signed in Kazakhstan n 2014.

To recall, in 2014-2015, the national currencies in all the EEU countries devaluated.  The first was Kazakhstan, where in February 2014, the National Banks refused to maintain the tenge rate and the dollar appreciated by more than 15%. Along with many other factors, the Kyrgyz national currency depreciated by 14% as against US dollar in 2014. The financial and currency crisis in Russia in December 2014 sparked a new wave of devaluations. Then the Russian ruble devaluated by 50% and slightly appreciated later.

Eventually, in 2014, ruble depreciated by 39%.  Ahead of joining the EEU, the Armenian authorities adopted a decision on Nov 26 2014 to reduce the exchange rate of the national dram against US dollar by 14%. The Belarus economy closely connected with the Russian economy devaluated by 40% in Dec 2014- Jan 2015. Temporary stabilization of the national currencies in Q2 2015 ended in Aug when the national currencies of Belarus, Armenia, Kazakhstan and Kyrgyzstan devaluated along with the Russian ruble.