Atom Margaryan: It`s time to launch exchange mechanisms to contain  sharp fluctuations in the exchange rate

ArmInfo.The time has come to launch exchange mechanisms to contain sharp fluctuations in the exchange rate. This opinion was expressed at an online press  conference on December 17 by the head of the Center for Innovative  and Institutional Research of the Armenian State Economic University,  economist Atom Margaryan, noting that from an objective point of  view, external signals and of course costs and pressure on reserves  played a decisive role in the devaluation of the dram.

According to him, large players are able to destabilize the financial  market very quickly, simply to bring down the dram if there is no  adequate action. "The Central Bank, naturally, cannot stand aside in  the current situation, despite the fact that sometimes such  accusations are heard," he said.

Margaryan shared his observations on the deformation of the state  debt structure, in the sense that domestic debt is incomparably much  more expensive and more risky, rather problematic, in recent years it  has formed in a sufficiently large unacceptable volume, and this puts  pressure on the real sector of the economy.

According to the economist, there is a problem of the economic model,  the ideology of economic policy, new conceptual approaches. "First of  all, it is necessary to discuss in expert, academic circles, to  transmit signals to political circles that make decisions on economic  policy," he said.

It is no secret that the owners of big capital are striving for power  today. "I will say openly and clearly - yes, risks of destabilizing  markets from this sector are also possible. I believe that both the  government and the Central Bank should be attentive to this issue,  not to allow such an impact, interference," A. Margaryan said.

It should be noted that the currency exchange platform in Armenia has  been empty for the third year in a row. And the foreign exchange  interbank, where banks were actively working, over the past two  months (November-December), when the dram began to weaken more  pronounced, was empty for 19 days, of which 11 fell on November (9 of  them - for the period until November 25).

Meanwhile, on November 24, the Central Bank of Armenia announced its  intention to conduct interventions in the foreign exchange market,  reiterating this on December 15, noting that it continues to monitor  the financial market and, if necessary, will use all the tools in its  arsenal, guaranteeing price stability and financial stability. 

Since the announcement (November 24) by the Central Bank of its  intention to carry out interventions until December 12 in the foreign  exchange market, a total of banks have made dollar transactions in  the amount of $ 3.650 million, of which $ 2.150 million fell on the  first week of December.  

To recall, a noticeable devaluation of the dram began to be observed  in the retail foreign exchange market of Armenia since the second  decade of October this year, with the approach of November 18 close  to the mark of 500 AMD / $ 1 on average, and the next day the rate of  the AMD against the dollar has already exceeded 501 AMD / $ 1 and by  November 23 it reached 507 AMD / $ 1 on average, continuing to weaken  more pronounced. Thus, on November 24, the dram exchange rate against  the US dollar jumped to 516 AMD / $ 1 on average, against the euro -  to 612 AMD / 1 euro, and against the ruble it rose moderately to 6.9  AMD / 1 ruble. However, after the announcement on November 24 by the  Central Bank of its intention to conduct interventions in the foreign  exchange market, a slow strengthening of the dram has already been  outlined since November 26, and by December 1 the dram strengthened  against the dollar to 507 AMD / $ 1 on average, against the euro - to  607 AMD / 1 euro, and against the ruble - up to 6.7 dr / 1 ruble,  continuing this attitude and on December 2 - respectively up to 506.5  dr / $ 1 and 605 dr / 1 euro, and "frozen" to the ruble at 6.7 dr / 1  ruble. But already from December 3, the dram devalued again to 511.5  AMD / $ 1, 619 AMD / 1 euro and 6.9 AMD / 1 ruble, with the  continuation of this trend in the following days, and by December 11  the dram weakened against the dollar to 521.5 AMD / $ 1, against the  euro - up to 634 AMD / 1 euro, against the ruble - up to 7.2 AMD / 1  ruble.  

Already on December 15, the dram devalued against the dollar and euro  to 528 AMD / $ 1 and 640 AMD / 1 euro, while maintaining its position  against the ruble, then by December 17, it strengthened against the  dollar to 523.5 AMD / $ 1, and remained at the level of 640 dr / 1  euro, and weakened to the ruble to 7.2 dr / 1 ruble. As a comparison,  we note that at the end of 2019, the AMD exchange rate against the US  dollar was 479.3 AMD / $ 1 on average, against the euro - 531 AMD / 1  euro, against the ruble - 7.7 AMD / 1 RUB.