By Emil Danielyan
The Armenian national currency, the dram, gained more ground against the U.S. dollar on Wednesday, registering its highest exchange rate since October 2000 despite weeks of political turmoil in the country.
The dram was trading at an average of 549 per dollar in Yerevan’s currency exchange bureaus, making its value almost 3 percent higher than two months ago.
Analysts found it hard to explain the phenomenon that bucked recent weeks’ global currency rate trends. The Central Bank of Armenia (CBA) denies any role in the dram’s strengthening, insisting that its floating rate is determined by the market factors of demand and supply.
According to Tigran Jrbashian of the Sed Marsed consulting firm, demand in the dram is pushed up by payment of first-quarter profit taxes by businesses which began on April 1. “The main reason for the dram’s strengthening is the collection of quite a lot of taxes in the course of this year,” he said.
The Armenian government reported a 30 percent jump in its profit tax revenues collected in the first three months of this year. The increase followed a toughening of penalties for the widespread evasion of the 20 percent corporate income tax.
The dram’s gains have been twice as stronger against another major world currency, the euro. One euro is currently worth 652 drams, down from 702 drams registered in late February. The difference seems to result from a recent rebound in the dollar’s value in the international currency markets.
The dram thus remains effectively pegged to the dollar despite the European Union’s status as Armenia’s number one trading partner. The EU’s common currency drained the greenback of nearly a fifth of its value last year. The dram similarly fell by almost 14 percent against the euro during the same period.