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Government Downplays Armenian Dram Depreciation


Armenia - Deputy Finance Minister Vartan Aramian at a business conference in Yerevan, 21Jun2012.

Armenia - Deputy Finance Minister Vartan Aramian at a business conference in Yerevan, 21Jun2012.

A senior government official downplayed on Thursday the continuing depreciation of Armenia’s national currency, the dram, saying that it reflects a global trend and has not affected living standards in the country.

The dram lost almost 4 percent of its nominal value measured against the U.S. dollar last month and another 2.4 percent since June 1. It is currently trading at around 417 drams per dollar, down from 389 drams per dollar in mid-January.

Deputy Finance Minister Vartan Aramian called the exchange rate fluctuations “normal,” saying that they have mainly resulted from the worldwide strengthening of the dollar. “We don’t live on the Moon,” he told reporters. “We live in the Republic of Armenia and what is happening around the world should affect us too.”

Aramian refused to predict the national currency’s value in the coming months, saying only that the Armenian authorities and the Central Bank in particular will not resort to large-scale hard currency interventions in the local financial market.

“We as well as the Central Bank have never acted against global developments because that would be nonsense,” he said. “If the whole world is depreciating against the United States, Armenia cannot appreciate.”

Finance Minister Vache Gabrielian suggested on Wednesday that seasonal factors were also at play. He said that the exchange rate will stabilize by August because of a traditional pickup in economic activity in Armenia.

The dram has lost ground in recent months despite continuing relatively robust economic growth, which is projected to stand at roughly 4 percent this year.

Aramian emphasized the fact that the despite the currency depreciation, consumer price inflation in the country has steadily fallen this year, reaching a year-on-year level of just 0.5 percent in May. He said this means that the weaker dram has not had an adverse impact on most ordinary Armenians.
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