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Armenian Currency Again Under Strain


Armenia -- A statue symbolizing the national currency, the dram, outside the Central Bank building in Yerevan.

Armenia -- A statue symbolizing the national currency, the dram, outside the Central Bank building in Yerevan.

A renewed depreciation of Armenia’s national currency, the dram, which began last month, has accelerated this week, despite the Central Bank’s apparently increased intervention in the local financial market.


The dram has weakened, in nominal terms, by 5.7 percent against the U.S. dollar and just over 4 percent against the euro over the past month. Roughly half of those losses have been incurred since Monday.

One dollar was worth 405 drams on Thursday at the close of trading at Yerevan’s NASDAQ OMX Armenia stock exchange. The exchange rate stood at around 403 drams per dollar on Wednesday.

The volume of currency transactions at the exchange on Thursday, almost $21 million, was much higher than usual. The Armenian Central Bank appears to have injected much of that money in an effort to shore up the dram.

The bank denied any heavy intervention, however. Its chief spokeswoman, Zaruhi Barseghian, also downplayed the dram’s renewed weakening. “The exchange rate is floating,” she told RFE/RL.

According to official data posted on its website, the Central Bank’s hard currency reserves shrunk by almost $123 million to $1.2 billion between last December and February.

The Central Bank already controversially spent an estimated $700 million on keeping the dram’s value virtually unchanged from October 2008 through March 2009 before allowing its nearly 20 percent devaluation. The measure was a necessary condition for the release of a $540 million stand-by loan by the International Monetary Fund (IMF). The dram’s exchange rate remained essentially stable in the following months.

Vahagn Khachatrian, an economist and senior member of the opposition Armenian National Congress (HAK), claimed that the dram has again come under strain because of “political instability” and the resulting “outflow of capital from Armenia.”

Andranik Tevanian, an independent analyst, gave a similar explanation. He said a sharp drop in multimillion-dollar remittances from Armenians working abroad is another major factor behind the dram depreciation.
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