By Shakeh Avoyan
Armenia’s Central Bank on Tuesday again ruled out any action to stop the continuing appreciation of the national currency, the dram, insisting that its negative impact on ordinary people is grossly exaggerated by government critics and the media.
The bank’s chairman, Tigran Sarkisian, brushed aside arguments that the stronger dram has not only hit hard Armenians dependent on external cash remittances but also domestic exported-oriented firms. The latter should try to improve the quality of their goods instead seeking “greenhouse conditions” from the Armenian authorities, he said.
“[Central Bank intervention] would mean exploiting the Armenian people for the sake of exporters,” Sarkisian told a news conference called ahead of his annual address to parliament. “In that case our exporters would get into everyone’s pocket and devaluate their dram revenues so that they can sell their non-competitive goods abroad.”
The dram has strengthened against the U.S. dollar by almost 30 percent since the beginning of last year, blowing a sizable hole in the budgets of families that live off cash sent by their relatives living abroad. They make up a large part of the country’s population.
The Central Bank and the Armenian government maintain that the dram has been pushed up by a drastic increase in those remittances. But their political opponents dismiss this explanation, alleging a high-level conspiracy designed to benefit large-scale importers of key commodities to Armenia. Critics argue that few of the imported goods now cost less in dram terms.
Sarkisian responded to this by saying that the Central Bank is only responsible for ensuring low inflation. “We won’t let the prices fall,” he said. “Once we see that the prices fall we resort to additional monetary emission. We don’t want deflation in Armenia.”
While denying any wrongdoing, the authorities have said that “speculative” currency trading has also been a factor in the exchange rate fluctuations. As recently as last week the Central Bank closed about two dozen currency exchange offices in Yerevan for allegedly violating trading regulations. Other currency traders in the city center went on a brief strike in protest against the measure.
“Exchange offices violating the law will continue to be closed and will not be reopened,” Sarkisian said.