Activity on interbank forex market stimulates appreciation of Armenian dram 

ArmInfo. Armenian dram continues to appreciate amid continuing active transactions on the interbank forex market. Over the current week (June 13-17), AMD appreciated against USD from 479 to 477 AMD/$1 amid daily active transactions on the interbank forex market ($1 mln-$ 1.7 mln) for the whole week, which registered the largest amounts in the first three days of the week with maximum in Tuesday. At the same time foreign stock market has seen no transactions this week either. 

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. It further strengthened to 479 AMD/$1 by March 29, after which in the first decade of April devaluated to 484.5 AMD/$1. By April 11 it again appreciated and stood at 479 AMD/$1 by April 29. This level was retained through May 11 inclusive, 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 15. Later revaluation was registered and AMD appreciated to 477 AMD/$1 by June 17. 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 either NASDAQ OMX Armenia has seen no transactions. At the same time the interbank forex market continues actively operating-the biggest amount of transactions was registered on June 14 - $1.7 mln and June 15 - $1.450 mln.  On June 13-17 the transactions totaled $6.450 mln (with 16.2% weekly decline) at the average exchange rate of 478.51 AMD/$1 (versus the previous 479.39).

The source says that on June 13-17, on the intra-bank currency market (transactions with customers) the banks bought $81.7 mln (43.9% growth versus the previous week) at the average exchange rate of 477.30 AMD/$1, and sold $80.2 mln (34.8% growth versus the previous week) at the average exchange rate of 478.90 AMD/$1. In the meantime, the banks bought 6.1 mln EUR (10.3% decline) at the average exchange rate of 536.06 AMD/1EUR, and sold 10.2 mln EUR (up 30.8%) at the exchange rate of 539.69AMD/1EUR. The banks also bought 996.4 mln RUR (down 13%) at the average exchange rate of 7.24 AMD/1RUR and sold 412.04 mln RUR (up 10.8%) at the exchange rate of 7.33 AMD/1RUR.

During the previous week (June 6-June 11), the Armenian banks provided AMD loans worth 43.2 bln and USD loans worth $33.9 mln. As compared with the previous week (May 30-June 4), AMD loans grew by 15.5%, and the ones in terms of USD grew by 20.6%.

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. 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 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 17 the AMD stood at 477 AMD/$1, 536 AMD/1EUR, and 7.2 AMD/1 RUR.