AMD devaluation prevented due to high activity on the interbank forex market

ArmInfo. Due to high activity on the interbank forex market, AMD devaluation was prevented. At the same time USD and EUR were actively sold on the intra-bank market, while active buy-up of foreign currency was registered a week ago. 

This week the interbank forex market ensured 10-fold more transactions, amid 1.5-2-fold growth of sales of USD and EUR on the intra-bank market, which prevented AMD from tangible devaluation from 475 to 477 AMD/$1.  At the same, NASDAQ OMX Armenia has seen no transactions this week either. The Central Bank still refrains from interventions. As a result, in Q1 2016, AMD devaluated against USD to 496 AMD/$1 (February 12) and then stood at initial 482 AMD/$1 on March 25. In general, in the first half of 2016, AMD appreciated from 482 to 477 AMD/$1, depreciating in mid Feb (from 482 to 496 AMD/$1 on Feb 12), in early April (from 479 to 484.5 AMD/$1), in mid May (from 479 to 480.5 AMD/$1 on May 12), in early and in late June (from 478 to 479 AMD/$1 on June 3, and from 476 to 477 AMD/$1 on June 30).  Independent experts say the AMD/USD exchange rate may rise to 540- 550 AMD/$1 by late 2016, amid the financial and economic crisis in Russia and the sliding prices of oil and crude metals, which is one of the key export items of Armenia.

The CBA press office has told ArmInfo that this week NASDAQ OMX Armenia has seen no transactions. The interbank forex market demonstrated daily activity, registering the biggest amounts of transactions on June 28, July 1 and June 29 - $4.250 mln, $2.6 mln and $2.050 mln, respectively. This time, the total amount during the week (June 27 - July 1) was $10.450 mln (10- fold growth versus the previous week) at the average exchange rate of 477.18 AMD/$1 (versus the previous 476.21 AMD/1USD).

The source says that on June 27-July 1, on the intra-bank currency market (transactions with customers) the banks sold $97.2 mln (up 42.5% versus the previous week) at the average exchange rate of 477.35 AMD/$1 and 31.8 mln EUR (over 2-fold growth) at the average exchange rate of 528.30 AMD/1EUR, while the sales of RUR dropped by 41.2% to 223.7 mln RUR at the average exchange rate of 7.45 AMD/1RUR.  The purchase of USD on the intra-bank market grew by 9.6% to $103.04 mln at the average exchange rate of 475.53 AMD/$, while the purchase of EUR and RUR fell. The banks bought 9.7 mln EUR (down 19.8%) at the average exchange rate of 525.39 AMD/1EUR, and 1.1 bln AMD (down 15.4%) at the average exchange rate of 7.32 AMD/1RUR.

During the previous week (June 20-25), the Armenian banks provided AMD loans worth 38.5 bln and USD loans worth $47.7 mln. As compared with the previous week (June 13-18), AMD loans grew by 4.9%, and the ones in terms of USD - by 53.4%.

To recall, in 2015, on the retail foreign exchange market of Armenia AMD weakened against USD from 477 to 482 AMD/$1 on average and strengthened against EUR from 571.5 to 529 AMD/1EUR and against Russian ruble from 8.2 to 6.9 AMD/1 RUR.  Between December 14 and 28, the Central Bank made almost daily interventions.  AMD depreciated amid decline of foreign trade turnover (by 20.6%), while import dropped more significantly (by 26.5%) than export (by 3.9%) as well as the decline in transfer 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 early 2016, AMD started depreciating again on the retail foreign exchange market of Armenia to 496AMD/$1, however since March it strengthened and stood at 482 AMD/1USD by March 25. Later, AMD started revaluating again since mid-April. By April 29, AMD appreciated against USD to 479 AMD/$1 and this trend continued in May. By May 31, AMD appreciated against USD to 478 AMD/$1, and against EUR to 532 AMD/1EUR, at the same time depreciating against RUR to 7.3 AMD/1RUR. The first half of June AMD demonstrated moderate depreciation, followed by appreciation: thus by June 30 the AMD stood at 477 AMD/$1, 529 AMD/1EUR, and 7.4 AMD/1 RUR. As of July 1 AMD was still at 477 AMD/$1, 529 AMD/1 EUR and devaluated against Russian Ruble to 7.5 AMD/1RUR.