Active transactions on forex inter-bank market hold national currency from devaluation

ArmInfo. On August 8-12, the declining USD and EUR purchase and sale transactions in the intrabank market of Armenia kept the Armenian dram (AMD) against USD at 476 AMD/$1, and against EUR at 531 AMD/1EUR. In the meantime, the intrabank market experienced active purchase of Russian ruble (RUR), with AMD depreciating against RUR from 7.2 to 7.4 AMD/1RUR. The interbank forex market, in turn, increases the USD transactions almost fivefold, but the operations were registered every day (ranging from $1-5.6mln to $300-$900 thsd a week before).   

The foreign exchange market is idling, with Central Bank refraining from intervention since the beginning of the year.  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 477 AMD/$1 level in the first half of July and totaling 476AMD/1USDon July 24. However, within the last week of the month, the national currency devaluated to 477AMD/1USD.

Since early August, the national drams has been devaluated to 476AMD/1USD. The press office of the Central Bank of Armenia has told ArmInfo that NASDAQ OMX Armenia is passive, while the transactions on the interbank forex market have intensified drastically on August 8-12. The highest amount was registered on Wednesday - $5.6mln, and the smallest amount was fixed on Monday - $1.4mln.  On August 8-12, the total amount of transactions in the intrabank forex market was $11.4 mln (versus $2.5 mln a week before), forming an average AMD/USD exchange rate at 476.48 AMD/1USD (versus the previous 476.57 AMD/1USD).

The source says that on August 8-12, the USD purchase transactions on the intrabank market dropped by 3.2% (versus 31.8% decline a week before). The EUR purchase dropped by 11.8% (versus 22.5% decline a week before).  Sales of USD and EUR grew by 2.7% and 8.4% respectively (versus 23.4% and 34.5% decline a week before, respectively).  RUR purchase and sale grew by 2% and 6.7%. $60.96 mln was bought at the average exchange rate of 475.35 AMD/1USD, 8.2 mln EUR was bought at 526.73 AMD/1EUR, and 1.2 bln RUR - at 7.29 AMD/1RUR. At the same time, $76.1 mln was sold at 476.81 AMD/$1, 10.3 mln EUR - at 531.52 AMD/1EUR, and 403.9 mln RUR - at 7.29 AMD/1RUR.

During the previous week (August 1-6), the Armenian banks provided AMD loans worth 35.6 bln and USD loans worth $68.6 mln. As compared with the previous week (July 25-30), USD loans grew by 21.4%, amid 2% decline of the ones in terms of AMD.

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 against USD, depreciating against EUR to 532 AMD/1EUR and appreciating against Russian Ruble to 7.1 AMD/1RUR. Over the first half of the next month (1-12 August), AMD appreciated against USD and EUR to 476 AMD/1USD and 531 AMD/1EUR, respectively, at the same time depreciating against RUR to 7.4 AMD/1RUR.