AMD changed mood to USD and EUR from devaluation on revaluation

ArmInfo. The currency interbank  of Armenia reduced the volume by 11.6% from March 27 to March 31,  after growing by 7.4% a week earlier. In parallel, on the intrabank  market, after passivity in the previous week, more active USD and EUR  transactions entered the active phase, the less significant are the  RUR transactions.

At this background, the one-day "awakening" of the exchange currency  market, after a two-week sleep, received too little attention of  bidders. As a result, the AMD for the reporting week changed its mood  to the USD from devaluation to strengthening - from 484.5 to 484  AMD/USD1, also restructuring and to the EUR from 522 to 516 AMD/USD,  while beginning to weaken to the RUR from 8,4 to 8.6% AMD/RUR1. A  year earlier, in March 2016, the AMD strengthened to the USD from 491  to 481 AMD/USD1, weakening to the EUR from 540 to 544 AMD/EUR1 and to  the RUR from 6.6 to 7.1 AMD/RUR1, which in comparison with the  current courses indicates the annual devaluation of the AMD to the  USD and the RUR, with revaluation to the EUR. For the entire year of  2016, the exchange currency market gave signs of life occasionally -  for one operation in March-May: $ 100 thousand in March, $ 2.950  million in April and $ 800 thousand in May, followed by a lull. The  Central Bank bought USD in April in the foreign exchange market ($  2.4 million at the rate of 478.5 AMD/USD1), June ($ 50.2 million at  the rate of 476.72 AMD/USD1), August ($ 19.8 million at the rate of  474.25 AMD/USD1), September ($ 28.8 million at the rate of 474.11  AMD/USD1) and October ($ 50.8 million at the rate of 475.47  AMD/USD1), and sold in January ($ 53.1 million at the rate of 484.69  AMD/USD1), February ($ 41.5 Million at the rate of 492.59 AMD/USD1),  November ($ 13.1 million at the rate of 478.56 AMD/USD1) and December  ($ 15 million at the rate of 483.06 AMD/USD1). In January 2017, the  exchange currency market showed only a volume of $ 600 thousand at  the rate of 486.79 AMD/USD1, and the Central Bank in the foreign  exchange market sold $ 15 million at the rate of 485.84 AMD/USD1.

The press service of the Central Bank of Armenia told ArmInfo that on  March 27-31, transactions in the amount of $ 14.150 million (weekly  decline by 11.6%) were made at the interbank market at the weighted  average rate of 484 AMD/USD1 (against the previous 483.69). During  the whole week, the foreign currency interbank fixed a significant  volume, increasing from $ 1.5 million on Monday to $ 4.1 million on  Thursday, then on Friday almost halved the turnover to $ 2.5 million.  In parallel, in the intrabank market, the weekly dynamics of currency  purchase/sale sharply changed the decline in growth. So, for the  reporting week, the volume of purchase/sale of USD from the 23.9-4.9%  decline came in 19-19.1% growth, the same pattern was observed for  the EUR operations from 20.8-6, 1% decline in 34.1-24.3% growth, and  at this background the uptrend in RUR transactions looked too modest  - buying slowed growth from 6.1% to 4.1%, and the sale changed 8%  decline to 2.4% growth. As a result, $ 81.9 million was purchased at  the average exchange rate of 483.06 AMD/USD1, 16.9 million EUR at the  average exchange rate of 520.62 AMD/EUR1 and 936.2 million RUR. At an  average rate of 8.47 AMD/RUR1, and sold $ 103.6 million at the  average rate of 484.39 AMD/USD1, 13.3 million EUR at an average rate  of 524.58 AMD/EUR1 and 392.04 million RUR at the average rate of 8.57  AMD/RUR1.

According to the source, over the previous week (March 20-25),  Armenian banks issued AMD loans for 44.9 billion AMD and USD loans  for $ 44.4 million. In comparison with the previous period (March  13-18), the dynamics of issued AMD loans was sharply replaced by a  vector from the rising 20,6% to a downward 0.2%, in parallel with  which the issuance of USD loans actively demonstrated the opposite  picture - an output by 31% growth from 37.1% decline a week earlier.

To recall, in 2015, the retail currency market of Armenia fell to the  USD from 477 to 482 AMD/USD1 on average, while strengthening against  the EUR from 571.5 to 529 AMD/EUR1 and against the RUR from 8,2 to  6.9 AMD/USD. Moreover, from mid-December almost every day the Central  Bank conducted interventions. The devaluation attitude of the AMD in  2015 was observed in parallel with a slowdown in the growth rate of  economic activity from 3.9% to 3.1%, a decrease in foreign trade  turnover (by 20.6%), and more significantly imports (by 26.5%) than  exports (by 3.9%), as well as the subsidence of the inflow of  transfers to Armenia by more than 30%, and this in the already low  purchasing power of the population. In 2016, in the retail foreign  exchange market, AMD devalued against the USD and the RUR to 484  AMD/USD1 and 8 AMD/RUR1, having strengthened to the EUR to 505  AMD/EUR1, which occurred under conditions of almost stagnant slowing  of economic activity growth to 0.5%, continuing, but at a slower  pace, subsidence of net inflow of transfers (by 24% y-o-y in  January-November). In parallel with this, in 2016, there was an  improvement in the dynamics of foreign trade turnover from a decline  to 7.4% growth due to exports and imports from the recession to a 20%  and 1.6% growth respectively, as well as deflation in the consumption  of 1,4%.