Active transactions on interbank forex market prevents Armenian dram from depreciation

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.  By April 2, AMD appreciated against USD to 480.5 AMD/$1, and then started depreciating again to 484.5 AMD/$1 by April 8. By April 15 AMD revaluated to 481 AMD/$1 with following strengthening to 479 AMD/$1 by April 29. This level was retained through May 11, but on May 12 it rose to 480.5 AMD/$1. However, on May 20, it dropped to 478 AMD/$1 and this level was retained till June 2. On June 3, however, AMD depreciated to 479 AMD/$1 and stood at that level till June 10.  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. At the same time the interbank forex market continues actively operating - on June 3-10 the transactions totaled $7.7 mln at the average exchange rate of 479.39 AMD/$1 (versus the previous 478.61). The biggest amount of transactions was registered on June 10 - $3.7 mln and June 7 - $2.6 mln. 

 

The source says that on June 6-10, on the intra-bank currency market (transactions with customers) the banks bought $57 mln (12.9% drop versus the previous week) at the average exchange rate of 477.92 AMD/$1, and sold $60.1 mln (12.3% decline versus the previous week) at the average exchange rate of 479.56 AMD/$1. In the meantime, the banks bought 6.8 mln EUR (35% decline) at the average exchange rate of 539.94 AMD/1EUR, and sold 7.8 mln EUR (down 27.1%) at the exchange rate of 545.04 AMD/1EUR. The banks also bought 1.15 mln RUR (up 33%) at the average exchange rate of 7.33 AMD/1RUR and sold 372.5 mln RUR (down 7%) at the exchange rate of 7.43 AMD/1RUR.

 

During the previous week (May 30-June 4), the Armenian banks provided AMD loans worth 37.4 bln and USD loans worth $28.1 mln. As compared with the previous week (May 23-28), AMD loans dropped by 1.1%, and the ones in terms of USD declined by 33.9%. 

 

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 however since March it strengthened and stood at 482AMD/1USD by March 25. At the same time AMD depreciated against EUR to 538 

AMD/1EUR and against RUR to 7.1AMD/1RUR. Later, AMD started revaluating again since mid-April. By April 29, AMD depreciated 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. By June 10, the AMD depreciated against USD to 479 AMD/$1, against EUR - to 541 AMD/1EUR, and against RUR - to 7.5 AMD/1 RUR. -n-