Central Bank of Armenia curbs devaluation trend of Armenian dram by means of intervention

 

The CBA press office has told ArmInfo that NASDAQ OMX Armenia was not active throughout February, while the interbank forex market actively operated throughout the month. The total amount of the transactions over the last week of February was $4.3 mln due to the CBA's 

interventions and the average exchange rate was fixed at 493.48 AMD/1USD. To note, the first large interventions of the Central Bank in 2016 were on January 15 ($32.4 mln), January 29 ($23.8 mln), February 5 (26.5 mln USD) and February 12 ($16.2 mln), while in 2015 the large interventions were on August 28 - $95 mln, September 19 - $22.2 mln, November 13 - $19.6 mln and smaller ones on December 11 - $6 million and on October 2 - $6 mln. 

 

The source says that on February 22-26, on the intrabank currency market (transactions with customers) the banks bought $63.8 mln (25% drop versus the previous week) at the average exchange rate of 492.03 AMD/$1, and sold $50.3 mln (38% drop versus the previous week) at the average exchange rate of 493.78 AMD/$1. In the meantime, the banks bought 5.3 mln EUR (weekly decline by 14%) at the average exchange rate of 541.83 AMD/1EUR, and sold 13.5 mln EUR (weekly growth by 24%) at the exchange rate of 546.41 AMD/1EUR. The banks also bought 684.3 mln RUR (33% weekly drop) at the average exchange rate of 6.41 AMD/1RUR and sold 361.2 mln RUR (16% weekly decline) at the exchange rate of 6.53 AMD/1RUR.

 

During the previous week (February 15-19), the Armenian banks provided AMD loans worth 45.1 bln AMD and USD loans worth 48.3 mln USD. As compared with the previous week (February 8-12), AMD loans increased by 24.6%, and the ones in terms of USD grew twofold.

 

To recall, during the 12 months of 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, despite the weekly interventions of the Central Bank, AMD started depreciating again on the retail foreign exchange market of Armenia and stood at 492 AMD/1USD by February 26. At the same time 

AMD depreciated against EUR to 545 AMD/1EUR and appreciated against RUR to 6.6 AMD/1RUR.