A day of idleness on inter-bank forex market prompts devaluation of dram

ArmInfo. A day of idleness on the forex inter-bank market prompted devaluation of dram fro 476AMD/1USD to 477AMD/1USD, but the following daily high- volume 
transactions ($1.7-$5.1 million) stopped that tendency trend.  On July 25-20 compared to the previous week, the amount of transactions on the interbank forex market grew 6%. Simultaneously, dollars and euros were purchased actively on the intra-bank foreign exchange market, amid falling interest in the transactions in Russian rubles. At the same time, NASDAQ OMX Armenia has seen no transactions this week either. The Central Bank still refrains from interventions. 

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), maintaining the 47 AMD/$1 level in the first half of July and totaling 476AMD/1USDon July 24. However, within the last week of the month, thenational currency devaluated to 477AMD/1USD. 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 again. The interbank forex market demonstrated daily activity, except Monday, registering the biggest amounts of transactions on July28 and 26 - $5.mln and $4,4 mln. This time, the total amount during the week (July 25 - 29) was $7.2 (versus $6.8mln for the previous week) at the average exchange rate 
of 476.73 AMD/1USD (versus the previous 476.57 AMD/$USD). 

The source says that on July 25-29, there was a high activity of dollar and euro transactions on the intra-bank market, amid decline of ruble transactions. The purchase of USD grew by 5.7% over the week and EUR by 13.2% amid decline of sales of USD b8 8.5% and growth of sales of EUR by 1.4%. At this background purchase/sale of Rubles fell 20.8% and 0.7%. Thus, the banks bought $92.9 mln at the average exchange rate of 475.52 AMD/$USD and 11.9 mln EUR at the average 
exchange rate of 522.43 AMD/1EUR and 995.1 mln RUR at the average exchange rate of 7.21 AMD/1 RUR, while they sold $96.6 mln at the average exchange rate of 476.85 AMD/1USD and 14.5 mln EUR at the average exchange rate of 527.63 AMD/1EUR, and 431.9 mln RUR at the average exchange rate of 7.31 AMD/1RUR. 

During the previous week (July 18 - 23), the Armenian banks provided AMD loans worth 33.6 bln and USD loans worth $44.4 mln. As compared with the previous week (July 11-16), AMD loans declined by 7.7%, amid 19.7% growth of the ones in terms of USD. 

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 July AMD was still at 477 AMD/$1, slightly depreciating against EUR to 530 AMD/1EUR and against Russian Ruble to 7.2 AMD/1RUR.