AMD exchange rate: Armenian CB ready to intervene 

ArmInfo.The Central Bank of Armenia will carry out operations in the foreign exchange market, the regulator  announced on the afternoon of October 5. Let us remind you that the day before the Armenian dram began a free fall in relation to foreign currencies - just yesterday on the retail foreign exchange market the  dollar exchange rate increased by 20 drams, averaging 435 drams/$1,and today it has reached almost the heights of 1.5 years ago - 460 AMD/$1.

"In order to ensure the normal functioning of the financial markets  of the Republic of Armenia, the Central Bank of the Republic of  Armenia will carry out operations in the foreign exchange market,"  the statement said. It is noted that the Central Bank of the Republic  of Armenia continues to monitor the state of financial markets and,  if necessary, will use all the tools available in its arsenal,  guaranteeing price and financial stability.

In a conversation with ArmInfo, financial market participants, who  asked for anonymity, admit that a certain loss of position of the  Armenian dram in relation to the "American" somewhere in the third  decade of September was objectively due to a reduction in the volume  of Armenian exports to the Russian market and the markets of the  EAEU, in particular , a decrease in the level of re-export of cars  due to the ban from Georgia. In this regard, the expert believes that  a return to 385 drams per dollar is unlikely. It was in this position  that the dram remained for almost a year. However, experts say that  the current exchange rate is still overvalued. "A kind of bubble,  inflated by the negative expectations of citizens," he declares.

At the same time, according to one expert, a serious tightening of  control over financial flows on dual-use goods, the volume of which  in 2022 was estimated at $2 billion drams, played a certain role in  the weakening of the national currency.

The reduction in remittances over the past two to three months, the  reduction in the key rate of the Central Bank, as well as the events  in Nagorno-Karabakh and, most importantly, all the same negative  expectations "contributed" to the loss of positions of the Armenian  dram, says another market participant.

People who have small savings rushed to exchange Armenian drams for  foreign currency, which, according to the expert, is fraught with  great risks. Meanwhile, ordinary citizens who do not have a  multimillion- dollar fortune, and according to the expert, about 97%  of the population, it is better to learn to live by following the  price index rather than the dram exchange rate.

However, according to the expert, nothing terrible is happening in  the market. Today, the Armenian dram is returning to the position it  was in before it was "strengthened" in 2022. In the end, he reminds,  by law, Armenia adheres to a floating exchange rate policy, which is  a fairly positive factor for the country's economy.

"Let's remember what the Armenian dram was in January 2022 (480-490  AMD/$1) - this value is a reasonable initial rate," the expert notes,  assuring that after two or three days of panic, the situation will,  in a certain sense, calm down.