AMD devaluation against Russian currency was prevented due to sharply grown interest towards transactions in RUR on intra-bank market of Armenia on July 4-8

ArmInfo. On July 4-8 compared to the previous week the amount of transactions on the interbank forex market declined 2-fold, however due to daily activity with ensuring amounts of $1.5-2 mln AMD was kept at the level of 477 AMD/$1. At the same time on the intra-bank market interest towards transactions with Rubles especially in sales has sharply grown, due to which AMD devaluation against Russian Ruble was prevented and was set at 7.5 AMD/1RUR. Amid this background USD and EUR transactions reduced significantly.  At the same time, 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 July 4, July 6 and July 8- $2 mln, $1.5 mln and $1.5 mln, respectively.  This time, the total amount during the week (July 4 - July 8) was $5.450 mln (versus $ 10.450 mln the previous week) at the average exchange rate of 477.44 AMD/$1 (versus the previous 477.18 AMD/$1).

The source says that on July 4-July 8, there was a low activity of dollar and euro transactions on the intra-bank market, while ruble transactions activated. Thus, the banks bought $46.98 mln at the average exchange rate 476.05 AMD/$1 and 5.7 mln EUR at the average exchange rate of 526.99 AMD/1EUR and sold $53.9 mln at the average exchange rate of 477.58 AMD/$1 and 9.1 mln EUR at the average exchange rate of 531.30 AMD/1EUR. The purchase of USD and EUR on the intra-bank market declined by 54.4% and 41.2% respectively, while sales declined by 44.6% and 71.4% respectively. At this background purchase of Rubles grew by 3% to 1.13 bln RUR at the average exchange rate of 7.39 AMD/1 RUR, and sale of Rubles grew by 68.4% to 376.6 mln RUR at the average exchange rate of 7.48 AMD/1RUR.

During the previous week (June 27-July 2), the Armenian banks provided AMD loans worth 56.7 bln and USD loans worth $119.4 mln. As compared with the previous week (June 20-25), AMD loans grew by 47.3%, and the ones in terms of USD grew significantly- 2.5-fold.

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. In the first fortnight of July AMD was still at 477 AMD/$1, appreciating against EUR to 528 AMD/1EUR and devaluating against Russian Ruble to 7.5 AMD/1RUR.