Within short-term outlook Central Bank of Armenia sees no risks capable endangering forex market stability

ArmInfo. Within the short-term outlook, the Central Bank of Armenia and international organizations see no reasons for strong pressure of external shocks on the stability of the forex market, CBA Deputy Chairman Nerses Yeritsyan said during the parliamentary hearings on the draft state budget of 2017. 

When asked by MP Mikayel Melkumyan about possible recurrence of the shock Armenia experienced in 2014, which resulted in the national currency crash, Yeritsyan said that the Central Bank of Armenia is conducting a mitigating monetary policy in order to level such shocks. Nevertheless, he pointed out that the CBA does not set itself a task to manage the exchange rate, but performs its function of curbing prices through an inflation targeting mechanism. 

As regards the forex market stability in terms of the market influence on export and import operations, Yeritsyan stressed that the tangible export growth and import decline over the past two years have nothing to do with the stable rate of Armenian dram, because in this case it is necessary to analyze the AMD real effective exchange rate proportional to the share of each of the main foreign trade partners of Armenia. He stressed that the export growth has no price component, but totally depends on growth of production and expansion of sales markets by Armenian exporters.

To note, in Jan-Sept 2016, export dynamics improvement (19.6% growth versus 0.9% decline in Jan-Sept 2015) tangibly reduced the unfavorable balance of Armenian foreign trade by 20.3%. Import retained negative dynamics but slackened decline to 0.8% from 26.6% a year before. In Jan-Sept 2016 versus Jan- Sept 2015, the foreign trade turnover of Armenia grew by 5.7% (down 20% in Jan-Sept 2015). According to the preliminary data of the Armenian National Statistical Service, in Jan-Sept 2016 the foreign trade turnover of Armenia amounted to 1724.7 bln AMD ($3588.1 mln); export - 621.4 bln AMD ($1293.1 mln), import - 1103.3 bln AMD ($2295 mln), with the unfavorable balance of foreign trade being 481.9 bln AMD ($1001.9 mln).