By Emil Danielyan and Karine Kalantarian
Armenia’s financial market was thrust into turmoil on Thursday as the national currency, the dram, briefly and mysteriously lost 10 percent of its value after a more than year-long appreciation against the U.S. dollar.
One dollar was trading at an average of 490 drams in Yerevan’s busiest currency exchange offices in the afternoon, sharply up from the official rate of 441 drams set by the Armenian Central Bank on Wednesday. The greenback stabilized at approximately 460 drams after an apparent Central Bank intervention. The bank fixed its new exchange rate at that level later in the day.
“The Central Bank is taking measures to ensure both a normal level of the dram’s liquidity in the market and the legality of transactions at exchanges bureaus,” it said in a statement. It urged Armenians not to “succumb to panic and sacrifice their [dollar] savings.”
The bank blamed the dramatic exchange rate fluctuation on those who have persistently alleged over the past year that the dram’s dramatic strengthening against both the dollar and the European Union euro was engineered by the Armenian authorities with the aim of benefiting wealthy government-connected importers of key commodities. “It is the fuss created by that false theory which is artificial in this situation,” the statement said.
However, the Central Bank chairman, Tigran Sarkisian, was less certain as he spoke to reporters earlier in the day. “It’s hard to explain [the latest fluctuations],” he said. “We are following the developments just like you.”
The dram has risen by at least 25 percent against the dollar since the beginning of last year. The Central Bank and the Armenian government have insisted all along that it was pushed up by a drastic increase in multimillion-dollar cash remittances sent home by Armenians working abroad. Officials from the International Monetary Fund have repeatedly endorsed this explanation.
The Armenian authorities, nonetheless, are certain to face more criticism of their exchange rate policy from their political opponents and other critics.