The more than month-long depreciation of the Armenian dram has accelerated this week amid a deepening financial crisis in Russia, the main source of vital cash remittances to Armenia.
The Russian ruble plunged more than 10 percent for the second day on Tuesday, recording its worst fall since 1998.
The currency depreciation was just as dramatic in Armenia, with the dram trading at roughly 530 per U.S. dollar in late afternoon, down by over 9 percent from its weekend exchange rate. The Armenian currency has lost 22 percent of its value against the dollar since it started depreciating in early November.
The Central Bank of Armenia (CBA) insisted a week ago that exchange rate fluctuations will be “negligible” from now on, saying that it has sufficient dollar reserves and citing its crackdown on “speculative” currency trading. The CBA has not stepped up its currency interventions so far this week, selling only $4 million to commercial banks on Tuesday and the same amount on Monday. Its daily dollar sales averaged $6 million last week.
Nor did the Central Bank comment on the intensifying dram depreciation after a meeting of its governing board on Tuesday. A CBA statement on the meeting said only that the board approved changes in a long list of banking regulations.
The latest fluctuations led Armenian banks and currency retailers to further restrict their dollar sales to businesses and people.Many currency exchange shops in Yerevan stopped selling dollars and euros altogether on Tuesday.
The currency crisis is also increasingly affecting broader economic activity in Armenia. Some food supermarkets and grocery stores repeatedly raised the prices of mainly imported goods throughout the day. Some of them went as far as to set limits on purchases of basic foodstuffs such as sugar. Some electronics shops in the capital effectively suspended their operations for the same reason.