By Atom Markarian
The surge in global oil prices this year has passed virtually unnoticed in Armenia due to the concurrent appreciation of the national currency, the dram, according to the country’s leading fuel importer.
One liter of gasoline currently costs between 310 and 330 drams ($0.64) in the Armenian market. The retail price has hardly changed since the beginning of 2004.
“The strengthening of the dram has had a positive impact on the prices,” Mushegh Elchian, the sales director of the Flash trading company, told RFE/RL. “If the dram traded at 550-560 per dollar today the price of one liter of our regular petrol would go up from 310 to 320 or 325 drams. Not to mention the fact that other firms would charge 330 or even 340 drams.”
In an unprecedented development, the dram has gained 8 percent in value against the U.S. dollar and other major world currencies since December, sparking speculation about exchange rate manipulation. Finance Minister Vartan Khachatrian last month did not rule out the possibility that speculative trading was behind the appreciation which has hit hard many Armenians dependent on regular dollar remittances from their relatives working abroad. Some economists have pointed the finger at government-connected importers of gasoline and other major commodities.
However, Armenia’s Central Bank has repeatedly dismissed the speculation, attributing the dram’s strengthening to a 46 percent jump in external cash remittances registered during the first half of this year.
Elchian argued that the fuel price stability is good both for fuel consumers and the Armenian economy as a whole. He said Flash estimates that the fuel imports to Armenia will be 15 percent up and expects its retail sales to soar by at least 35 percent in 2004.
Meanwhile, oil prices hit new all-time highs in the world markets on Wednesday, with U.S. light crude rising 42 cents to a record $47.17 a barrel and London Brent rising 21 cents to $43.20 a barrel. U.S. oil is now worth 27 percent more than at the end of June.