Friday, November 3 2017 19:44
Alina Hovhannisyan

Nerses Yeritsyan: High interest rates and the prevalence of the dollar component in deposits prevent the availability of derivatives

Nerses Yeritsyan: High interest rates and the prevalence of the dollar component in deposits prevent the availability of derivatives

ArmInfo. The Central Bank of Armenia is working to increase the availability of derivatives. The Deputy Chairman of the Central Bank of Armenia Nerses Yeritsyan told the journalists on the margins of the 24th General Assembly of FEAS on November 3. He explained that one of the reasons preventing the availability of derivatives is high interest rates. "Today, dram deposits are low, which does not allow reducing interest rates, and in the face of high interest rates against the prevalence of the dollar component in deposits, it is not possible to form available derivative instruments that will help the business to hedge possible market risks," concluded Yeritsyan.

As he stated earlier, in Armenia, the swap and money market indices SWAP and RUONIA need to be introduced for the full-fledged work of the derivative instruments market. Corresponding amendments to the law "On the securities market" are made taking into account the requirements and standards of the International Swaps and Derivatives Association (ISDA). "This will give green light to the international large banks in terms of providing us with liquidity," he said, adding that these are tools such as swap contracts, futures, forwards and repo deals that allow you to hedge the transaction against possible price fluctuations (the exchange rate, interest rate, consumer prices). The securities market (government bonds and corporate bonds) has reached serious volumes, and these instruments can serve as collateral for attracting international capital. In addition, some banks withdrew their securities to the international market, due to which Armenia appeared on the risk-monitoring map of major world banks. "That is why we are inclined to adopt the ISDA-approved derivative agreements, our financial institutions and companies work with derivatives, but only within the country, now we need to give this issue a global solution for entering the international market," Yeritsyan stated.

In its three-year program, the Government of Armenia envisaged that, since 2018, entrepreneurs should have access to derivative instruments as export promotion mechanisms, which is connected with the urgency of filling legislative gaps and the need to create a swap index (indicative price of currency swaps) and money market index (RUONIA). The International Association of Swaps and Derivatives Association (ISDA) unites over 800 organizations-participants in the market of derivative financial instruments from 67 countries of the world.

According to the Central Bank of Armenia, the volume of deposits in Armenian banks by October 1, 2017 increased by 17.5% per annum, amounting to 2.4 trillion AMD. Traditionally, the currency component in the deposit structure prevails over the share of AMD, correspondingly 62.4% (1.5 trillion AMD) and 37.6% (932.8 billion). Foreign currency deposits in the annual section increased by 9.8%, dram deposits - by 32.9%. At the same time, the share of term deposits accounts for 53.6% or 1.3 trillion AMD with annual growth of 12.9%.

According to NASDAQ OMX Armenia, the volume of stock exchange transactions with corporate bonds for Jan-Aug 2017 was 8.1 bln AMD (an annual increase of 2.8 times), of which the lion's share is in transactions on dollar bonds, and with government bonds - 35.9 bln AMD (annual growth of 2.1 times). At the end of August 2017, at the exchange, 38 tranches of corporate bonds of 11 issuers are quoted, and there are 24 tranches of dollar corporate bonds, out of which 8 banks issued 20 issues.

According to the Ranking of Armenian Banks, prepared by NA ArmInfo, the assets of the banking system exceed AMD 4.1 trillion by October 1, 2017, the volume of investments in securities - 508.3 billion AMD.  The assets of the banking system increased by 19% on an annual basis, investments in securities by 37%.  As of now, 17 banks operate in Armenia, whose total net profit for 9 months was 29.5 billion AMD with an annual growth of 69.8%. (The calculated exchange rate of the dram as of 30.09.2017 is 478.41 AMD/USD1).

POST A COMMENT
Input digits     


News
Converse bank will cover the insurance costs within the framework of program lendingConverse bank will cover the insurance costs within the framework of program lending
Armenia, Russia to deepen strategic partnership in both nuclear and  non-nuclear energyArmenia, Russia to deepen strategic partnership in both nuclear and  non-nuclear energy
Government proposes way to solve problem with export of fruits and  vegetablesGovernment proposes way to solve problem with export of fruits and  vegetables
Minister: Dram revaluation may lead to repeated Minister: Dram revaluation may lead to repeated "destruction" of the  industry
Financing of subvention programs in Armenia reached 7.3 billion drams  in 2022Financing of subvention programs in Armenia reached 7.3 billion drams  in 2022
WB to provide technical assistance to educational sector of Armenia  under PPPWB to provide technical assistance to educational sector of Armenia  under PPP
Armenian government recognizes number of territories in Syunik as  Armenian government recognizes number of territories in Syunik as  "overriding public interest" for construction of North-South Corridor
Lawyer in Lawyer in "March 1" Case nominated as Judge of Armenia`s  Constitutional Court
Order Mastercard Standard and Mastercard Gold and use the preferential credit lineOrder Mastercard Standard and Mastercard Gold and use the preferential credit line
Pashinyan: From January 1, 2023, pensions, the minimum wage and  benefits will be increased in ArmeniaPashinyan: From January 1, 2023, pensions, the minimum wage and  benefits will be increased in Armenia
Tax collections will exceed the level planned for the first half of  the year by about 60 billion drams:  PashinyanTax collections will exceed the level planned for the first half of  the year by about 60 billion drams:  Pashinyan
In 2022, Armenia will be able to reduce the level of government debt  much faster than planned: Ministry of FinanceIn 2022, Armenia will be able to reduce the level of government debt  much faster than planned: Ministry of Finance
Armenia could be major supplier of sugar beet seeds to EAEU  member-states Armenia could be major supplier of sugar beet seeds to EAEU  member-states 
Armenia 84th in Speedtest Global Index rankings Armenia 84th in Speedtest Global Index rankings 
CBA: Inflow of foreign labor migrants and capital to Armenia has  increased projected GDP growth to 4.9%CBA: Inflow of foreign labor migrants and capital to Armenia has  increased projected GDP growth to 4.9%
Central Bank of Armenia forecasts increase in exports by 5.1% and  imports by 8.3% for 2022Central Bank of Armenia forecasts increase in exports by 5.1% and  imports by 8.3% for 2022
Poland considers Armenia as profitable platform for entering EAEU  marketPoland considers Armenia as profitable platform for entering EAEU  market
In its improved forecast for 2022, CBA reduces decline in net  remittance inflows to 12% from previous 20%In its improved forecast for 2022, CBA reduces decline in net  remittance inflows to 12% from previous 20%
Business community of Armenia called on government to find assistance  mechanisms in connection with dram revaluation Business community of Armenia called on government to find assistance  mechanisms in connection with dram revaluation 
CBA forecasts 14.8% unemployment in ArmeniaCBA forecasts 14.8% unemployment in Armenia
Majority interest in Armenia Securities Exchange was transferred to  Warsaw Stock ExchangeMajority interest in Armenia Securities Exchange was transferred to  Warsaw Stock Exchange
ACBA Bank and Ameriabank helped beneficiaries to equip cash registers  with system for accepting non-cash payments with investmentsACBA Bank and Ameriabank helped beneficiaries to equip cash registers  with system for accepting non-cash payments with investments
Armenia, Russia to expand cooperation in agricultural and industrial  fieldsArmenia, Russia to expand cooperation in agricultural and industrial  fields
Rossiya Airlines to start operating flights from Samara to Yerevan  from July 2Rossiya Airlines to start operating flights from Samara to Yerevan  from July 2
A joint Armenian-Russian technopark may be established in Armenia-  GordeyevA joint Armenian-Russian technopark may be established in Armenia-  Gordeyev
IMF improves Armenia`s GDP growth forecast for 2022 to 5%IMF improves Armenia`s GDP growth forecast for 2022 to 5%
Halal to open office in ArmeniaHalal to open office in Armenia
Government of Armenia approves regular applications for  implementation of subvention programs in 7 regions of countryGovernment of Armenia approves regular applications for  implementation of subvention programs in 7 regions of country
Process of discussing construction project of new power unit in  Armenia begunProcess of discussing construction project of new power unit in  Armenia begun
How long will the drama with rising dram last? - Haykaz FanyanHow long will the drama with rising dram last? - Haykaz Fanyan
Service sector is main driver of double-digit economic growth in  ArmeniaService sector is main driver of double-digit economic growth in  Armenia
ADB: Armenia is a country of great opportunitiesADB: Armenia is a country of great opportunities
Armenia`s government plans renovation of 500km of roads Armenia`s government plans renovation of 500km of roads 
ARARATBANK resumes payment of dividends in 2022 and plans new issue  of sharesARARATBANK resumes payment of dividends in 2022 and plans new issue  of shares
At the end of 2021, EDB investment portfolio reached USD 4.5 billionAt the end of 2021, EDB investment portfolio reached USD 4.5 billion
Business community of Armenia calls on economic authorities to take  urgent measures to rescue businesses that suffered greatly from sharp  revaluation of dramBusiness community of Armenia calls on economic authorities to take  urgent measures to rescue businesses that suffered greatly from sharp  revaluation of dram
Armenian NPP has been connected to country`s national gridArmenian NPP has been connected to country`s national grid
Armenian Deputy PM took part in meeting of EDB CouncilArmenian Deputy PM took part in meeting of EDB Council
Rustam Badasyan proposed to WCO Secretary General to hold 6th Global  Canine Forum in YerevanRustam Badasyan proposed to WCO Secretary General to hold 6th Global  Canine Forum in Yerevan
Armenia, Korea stress necessity to conclude intergovernmental  agreement on cooperation in customs mattersArmenia, Korea stress necessity to conclude intergovernmental  agreement on cooperation in customs matters
FLY BAGHDAD launches Baghdad-Yerevan-Baghdad flightsFLY BAGHDAD launches Baghdad-Yerevan-Baghdad flights
Armenia`s exchange market oversupplied with US dollars - expert Armenia`s exchange market oversupplied with US dollars - expert 
Opening of the second customs zone on Upper Lars will increase the  throughput capacity of the checkpoint by 30% - KerobyanOpening of the second customs zone on Upper Lars will increase the  throughput capacity of the checkpoint by 30% - Kerobyan
FLYONE ARMENIA sends its 100.000th passenger on flightFLYONE ARMENIA sends its 100.000th passenger on flight
Fly Arna office opened at Zvartnots International AirportFly Arna office opened at Zvartnots International Airport
Different prices for same product or service can not be set,  depending on method of payment, cash or non-cash -CBA  message Different prices for same product or service can not be set,  depending on method of payment, cash or non-cash -CBA  message 
ARARATBANK to act as a major sponsor of UAV contest in ArmeniaARARATBANK to act as a major sponsor of UAV contest in Armenia
Armenia can achieve economic growth of 7-9% in 2022Armenia can achieve economic growth of 7-9% in 2022
Armenia`s authorities to invest in new capital programmes Armenia`s authorities to invest in new capital programmes 
Registered jobs and taxes on them are again unprecedented in Armenia Registered jobs and taxes on them are again unprecedented in Armenia 
Inflation in Armenia is a social catastrophe: EconomistInflation in Armenia is a social catastrophe: Economist
Competition Protection Commission of Armenia on how exchange rate  affected cost of granulated sugar and sunflower oilCompetition Protection Commission of Armenia on how exchange rate  affected cost of granulated sugar and sunflower oil
Orion Summit 2022: The main challenge for Armenia is a change in  mindsetOrion Summit 2022: The main challenge for Armenia is a change in  mindset
EPIC announces start of accepting applications for participation in  Entrepreneurship World Cup EPIC announces start of accepting applications for participation in  Entrepreneurship World Cup 
ACBA Leasing has rebranded and intends to double its leasing  portfolio in next 2 yearsACBA Leasing has rebranded and intends to double its leasing  portfolio in next 2 years
EDB launches EDB launches "Jobs in EAEU" app, presenting it to heads of  governments of EAEU 
EAEU countries agreed to lay Southern Railway in ArmeniaEAEU countries agreed to lay Southern Railway in Armenia
Competition Protection Commission: Over the past 12 months, diesel  fuel and flour have risen in price in Armenia Competition Protection Commission: Over the past 12 months, diesel  fuel and flour have risen in price in Armenia 
Heads of governments of EAEU countries sign cooperation documentsHeads of governments of EAEU countries sign cooperation documents
Asphalt carpet is being laid along the Lanjik-Gyumri section under  the North-South Asphalt carpet is being laid along the Lanjik-Gyumri section under  the North-South 
Read more


Exchange rates
01.07.2022
RUB7.46-0.29
USD407.950.74
EUR426.352.81
GBP491.82-0.99
CAD315.780.60
JPY30.140.28
CNY61.010.34
CHF424.640.06