By Emil Danielyan and Atom Markarian
Armenia’s Central Bank revealed on Friday plans to tighten its regulations for foreign exchange trading after closing over two dozen currency exchange offices accused of artificially boosting the value of the national currency, the dram.
The 22 private firms located in downtown Yerevan had their licenses revoked this week after an inspection conducted by Central Bank officials. The latter claimed to have detected large-scale cash operations that were not entered into their books. About a dozen other exchange offices were either fined or suspended on the same charges.
The crackdown followed a more than 5 percent surge in the dram’s value against the U.S. dollar during the first week of this month. The dollar rallied after President Robert Kocharian ordered the Central Bank to take action against “speculative activities” which he said contributed to the fluctuation.
The bank’s chairman Tigran Sarkisian, who had earlier denied exchange rate manipulation, promised more such inspections as he met with representatives of an association of currency traders. Sarkisian was quoted by his press service as telling them that the authorities are preparing a legislative package that will “drastically restrict” large-scale currency conversions in cash. The Central Bank will now pay greater attention to “regulating the activities of exchange bureaus,” he said.
The dollar has lost ground to other major world currencies over the past year, but its fall against the dram has been particularly dramatic. The stronger dram has hit hard a large part of Armenia’s population which is dependent on regular dollar remittances from family members working abroad. Economists critical of the government say it will also hurt Armenian exporters.
One of them, Eduard Aghajanov, on Friday again criticized the authorities for refusing to shore up the dollar in the domestic financial market. “The Central Bank’s inactivity is inexplicable,” he said. “The so-called consumer imports to Armenia are rising at the expense of domestic manufacturing.”
Speaking to RFE/RL earlier this week, Trade and Economic Development Minister Karen Chshmaritian, acknowledged that Armenian exporters could soon feel the pinch but spoke out against any monetary intervention. “During our meetings I advised them to carry out their deals in the currency which they believe is more stable,” he said.