Friday, June 17 2022 17:49
Naira Badalian

Will Armenia benefit from AMD appreciation? 

Will Armenia benefit from AMD appreciation? 

ArmInfo.If the factors causing AMD appreciation prove temporary, Armenia could face serious problems, ex-minister of finance of Armenia Vardan Aramyan said in an interview with the 5th Armenian channel.

Despite the USD appreciation, many countries, including Russia and  Belarus, are recording appreciation of national currencies. 

"The primary cause of appreciation of the Armenian dram is changes in  Armenia's foreign trade pattern," he said. Specifically, western  sanctions forced Russia to start trading in RUB terms, which has had  a natural effect on its trade with Armenia. "Russian exports to  Armenia are around $1.3bln. Armenia's annual payments for Russian gas  alone total $460 to $480mln. So we have enormous surplus funds  available amid the developments," he said. 

A second factor determining AMD appreciation is the increasing number  of people arriving in Armenia amid the Russian-Ukrainian  confrontation - a four-fold increase from Russia alone. They exchange  either Russian rubles or US dollars to Armenian dram thereby  increasing demand for the Armenian currency.  Money transfers from  the USA and Russia have increased as well. 

Mr Aramyan warns against making distinctly positive or negative  assessments of the situation. Rather, the situation should be  considered from the viewpoint of all the "beneficiaries". 

Specifically, consumers benefit from AMD appreciation as it keeps the  prices for imported goods down.  The situation is also favorable to  importers and non-exportable products - they former are reducing  their USD expenditures and gaining advantage. 

On the other hand, exporters are at a disadvantage as their profits  are considerably decreasing amid increasing AMD expenditures. And  only about 30% of exporters (those exporting to Russia) are in a  relatively favorable situation, as the Armenian dram has not  appreciated against the RUB. 

According to Mr Aramyan, if the factors determining AMD appreciation  are not permanent, Armenia could face serious problems (for example,  similar to those in 2008 and 2009, when Armenia's economy recorded a  decline of around 14%). Specifically, if the visitors to Armenia stay  for a while or view Armenia as a transit country, we are going to see  an opposite picture after they leave. 

Under the circumstances, the AMD can go on appreciating thereby  enabling Armenia to fill the gap between the actual and potential  GDP, ensuring a balance or pursuing a sterilization policy by buying  up USD surpluses and simultaneously draining the market of Armenian  drams by means of government bond issues so as not to fuel inflation  expectations with surplus funds. 

Mr Aramyan is inclined to the second scenario despite the fact it is,  in a sense, in line with inflation targeting. However, it will allow  the AMD appreciation rates to be reduced. The Central Bank of Armenia  (CBA) will build up some reserves and will be better prepared for the  temporary nature of the factors determining AMD appreciation. The  financial authorities' policy will support the export-orientated  sector of Armenia's economy as well, which will prevent it from  finding itself in a situation similar to that in the first decade of  the 2000s. l 

According to the CBA, the net inflow of private transfers to Armenia  showed an accelerated year-on-year increase up to 94% this  January-April against the 80% in the corresponding period last year,  totaling $394.3mln, which was largely due to a manifold increase in  transfers from Russia, whereas transfers from the USD were the  primary cause of increase last January-April. 

The inflow of private transfers to Armenia showed a 60.2%  year-on-year increase this January-April against the 29.1% increase  last January-April, totaling $981.6mln. Private transfers to Armenia  from Russia showed a 2.2-fold year-on-year increase against a 9.4%  increase last January-April, totaling $471.6mln. 

The net inflow of transfers from Russia totaled $306.1mln, with a  3.2-fold accelerated year-on-year increase against the 5.2% increase  last January-April. The private transfers to Armenia from the USA  showed a 20% increase against a 2-fold increase last January-April,  totaling $199.1, with the net increase in transfers from the USA  being 5.8% against a 3-fold increase, totaling $115.2mln. 

Russia's share in the inflow increased from 37.9% in January-April  2021 up to 51.3% this January-April, (51% in January-April 2019). The  USA's share in the inflow of transfers decreased from 28.9% to 21%  (against 15.3% in January-April 2019).

POST A COMMENT
Input digits     


News
Pashinyan discusses  Armenian Export Strategy 2025-2030   Pashinyan discusses  Armenian Export Strategy 2025-2030   
Russia`s share in money transfers to Armenia 65% Russia`s share in money transfers to Armenia 65% 
Armenia`s economy to stabilize on 5.5% growth trajectory - EDBArmenia`s economy to stabilize on 5.5% growth trajectory - EDB
Ucom Subscribers can Benefit from 5G Network in More than 40 CountriesUcom Subscribers can Benefit from 5G Network in More than 40 Countries
ADX Group CEO: Tabadul plays a strategic role in our ambition to reshape regional capital mobilityADX Group CEO: Tabadul plays a strategic role in our ambition to reshape regional capital mobility
Following  two Armenian officials` visit to Tbilisi, another 55  Armenian trucks receive permission to leave for RussiaFollowing  two Armenian officials` visit to Tbilisi, another 55  Armenian trucks receive permission to leave for Russia
EDB:  Armenia`s Central Bank may tighten monetary policy due to  increased risks of external inflation from the Middle East escalation EDB:  Armenia`s Central Bank may tighten monetary policy due to  increased risks of external inflation from the Middle East escalation 
Economy Minister, State Revenue Committee Chair of Armenia  seeking solutions to address issues with Armenian cognac  export  through Georgia Economy Minister, State Revenue Committee Chair of Armenia  seeking solutions to address issues with Armenian cognac  export  through Georgia 
Revolutionary step in Armenian capital market: Ameriabank gains direct access to AMXTreader  Trading system for its clientsRevolutionary step in Armenian capital market: Ameriabank gains direct access to AMXTreader  Trading system for its clients
New NNP to supply electric energy at higher price - PSRC chairman New NNP to supply electric energy at higher price - PSRC chairman 
Armenia`s premier, ArmCham discuss investments to improve business environmentArmenia`s premier, ArmCham discuss investments to improve business environment
RA State Revenue Committee exposes tax evasionRA State Revenue Committee exposes tax evasion
366 trucks with Armenian apricots cross Russia`s customs border 366 trucks with Armenian apricots cross Russia`s customs border 
Armenia`s minister of economy, head of State Revenue Committee travel to Georgia Armenia`s minister of economy, head of State Revenue Committee travel to Georgia 
USD transactions up, RUB ones down in Armenia`s interbank foreign exchange market June 16 to 20USD transactions up, RUB ones down in Armenia`s interbank foreign exchange market June 16 to 20
Goar Barseghyan: Armenia, Russia complement each other in terms of food securityGoar Barseghyan: Armenia, Russia complement each other in terms of food security
Mher Grigoryan: We need to think more about logistics and  consolidationMher Grigoryan: We need to think more about logistics and  consolidation
RA government establishes state-owned CJSC to manage 15% of  shares of Ayg-1 solar power plant RA government establishes state-owned CJSC to manage 15% of  shares of Ayg-1 solar power plant 
Armenian authorities to provide additional financing to EFSD grant program aimed at preventing the spread of COVID-19Armenian authorities to provide additional financing to EFSD grant program aimed at preventing the spread of COVID-19
RA State Revenue Committee receives additional financing for excise stamps RA State Revenue Committee receives additional financing for excise stamps 
Armenia could close its sky for Russia in case of Eurointegration -  RF vice-premier Armenia could close its sky for Russia in case of Eurointegration -  RF vice-premier 
Rosatom Service delivers 1,500 tons of new equipment to Armenian NPPRosatom Service delivers 1,500 tons of new equipment to Armenian NPP
IDBank and Henley & Partners Successfully Held the “Invest Beyond Borders: Global Mobility & Private Banking” Event in YerevanIDBank and Henley & Partners Successfully Held the “Invest Beyond Borders: Global Mobility & Private Banking” Event in Yerevan
AraratBank holds Annual  General Meeting of Shareholders AraratBank holds Annual General Meeting of Shareholders
Pashinyan will not attend EAEU forum in Minsk on June 26-27Pashinyan will not attend EAEU forum in Minsk on June 26-27
Ruling party MP: The Committee on Economic Affairs does not currently  have a bill regarding the nationalization of the Ruling party MP: The Committee on Economic Affairs does not currently  have a bill regarding the nationalization of the "Electric Networks  of Armenia" in circulation
Decline in mortgage lending in Armenia due to canceled reimbursement of income tax Decline in mortgage lending in Armenia due to canceled reimbursement of income tax 
Acba Bank to allocate AMD 6bln to payment of dividends for 2024 Acba Bank to allocate AMD 6bln to payment of dividends for 2024 
Armenian trucks with brandy cross Armenian-Georgian border - State Revenue CommitteeArmenian trucks with brandy cross Armenian-Georgian border - State Revenue Committee
Tashir Group of Companies sees no risks for its business in RussiaTashir Group of Companies sees no risks for its business in Russia
Economy Minister  on the situation around cognac products: We are  ready to undergo international expertiseEconomy Minister  on the situation around cognac products: We are  ready to undergo international expertise
New head of IMF mission in Armenia meets with Minister of Territorial  Administration and InfrastructureNew head of IMF mission in Armenia meets with Minister of Territorial  Administration and Infrastructure
Economy Minister receives IMF delegation Economy Minister receives IMF delegation 
PSRC fines Electric Networks of Armenia 10 million dramsPSRC fines Electric Networks of Armenia 10 million drams
Francoise Jacob: Armenia can prove itself as a regional leader in tourism and biodiversity at COP17Francoise Jacob: Armenia can prove itself as a regional leader in tourism and biodiversity at COP17
Ardshinbank Continues to Expand Its Network of Modern BranchesArdshinbank Continues to Expand Its Network of Modern Branches
RA Central Bank tyring to resolve housing problem for border region residents RA Central Bank tyring to resolve housing problem for border region residents 
EAEU has proved its efficiency over last 10 years - EEC minister EAEU has proved its efficiency over last 10 years - EEC minister 
Armenia`s Central Bank predicts slower GDP growth of  5.1-4.6% in  2025, with a significant decline in exports and imports Armenia`s Central Bank predicts slower GDP growth of  5.1-4.6% in  2025, with a significant decline in exports and imports 
CB Governor: Armenian banking system currently has no issues in managing potential risksCB Governor: Armenian banking system currently has no issues in managing potential risks
RA CBA Chairman: The factor of the Iranian-Israeli conflict may lead  to an increase in the refinancing rateRA CBA Chairman: The factor of the Iranian-Israeli conflict may lead  to an increase in the refinancing rate
Pashinyan, IMF mission chief discuss joint programsPashinyan, IMF mission chief discuss joint programs
Armenia believes in its long-term effective cooperation with  IMFArmenia believes in its long-term effective cooperation with  IMF
Armenia to reduce its domestic debt from 2025 on - minister Armenia to reduce its domestic debt from 2025 on - minister 
Armenia, Iraq to sign memorandum of understanding in culture and tourism Armenia, Iraq to sign memorandum of understanding in culture and tourism 
Armenia`s Central Bank once again left refinancing rate unchanged at 6.75%Armenia`s Central Bank once again left refinancing rate unchanged at 6.75%
Armenia, Germany strengthening regional cooperationArmenia, Germany strengthening regional cooperation
Opposition MP meets with IMF reps, concerned over threats to  Armenia`s economy Opposition MP meets with IMF reps, concerned over threats to  Armenia`s economy 
Converse Bank Partners with IFC to Boost Trade Finance Capabilities Converse Bank Partners with IFC to Boost Trade Finance Capabilities 
Rosselkhoznadzor concerned over regular violations of quarantine  norms in flowers imported from Armenia Rosselkhoznadzor concerned over regular violations of quarantine  norms in flowers imported from Armenia 
Approximately 28,000 declarants received reimbursement for social expenses totaling 2.5 billion drams:  PashinyanApproximately 28,000 declarants received reimbursement for social expenses totaling 2.5 billion drams:  Pashinyan
Armenia`s Cabinet of Ministers  discussing  new Tax Code Armenia`s Cabinet of Ministers  discussing  new Tax Code 
Ameriabank Partners with HIF Yerevan 2025 to Boost Hospitality Investment in ArmeniaAmeriabank Partners with HIF Yerevan 2025 to Boost Hospitality Investment in Armenia
Side by Side: IDBank Launches New Program for women forcibly displaced from ArtsakhSide by Side: IDBank Launches New Program for women forcibly displaced from Artsakh
Armenia  not planning to enter the Eurobond market 6 times in 2025  and 2026.Armenia  not planning to enter the Eurobond market 6 times in 2025  and 2026.
Finance Minister  talks about possible impact of Iran-Israel conflict  on Armenia`s economyFinance Minister  talks about possible impact of Iran-Israel conflict  on Armenia`s economy
 Armenian freight carriers face challenges due to Iranian-Israeli  conflict  Armenian freight carriers face challenges due to Iranian-Israeli  conflict 
Armenia plans to reduce its budget deficit to 1% by 2030: Finance  MinisterArmenia plans to reduce its budget deficit to 1% by 2030: Finance  Minister
WB launches water-supply and irrigation improvement programme in  Armenia WB launches water-supply and irrigation improvement programme in  Armenia 
Construction model for new nuclear power unit to be determined after  survey - official Construction model for new nuclear power unit to be determined after  survey - official 
Read more
Exchange rates
24.06.2025
RUB4.930.00
USD385.62-0.46
EUR447.284.68
GBP524.838.29
CAD281.131.14
JPY26.580.49
CNY53.760.05
CHF476.074.38