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The Central Bank of Armenia (CBA) has slightly lowered the minimum cost of borrowing in the country which rose sharply following a significant depreciation of the national currency, the dram, late last year.

The CBA set its benchmark refinancing rate at 10.25, down by 0.25 percentage points, at a meeting of its governing board on Tuesday. In an ensuing statement, the bank attributed the move to easing inflationary pressures on the Armenian economy.

It said year-on-year consumer price inflation fell to 4.2 percent in July thanks to the decreased cost of domestic agricultural products made possible by favorable weather conditions. The CBA expects inflation to fall further in the second half of this year. Its statement cited falling international commodity prices and the fact that electricity prices will remain unchanged for Armenian households for now.

The tariffs were due to rise by more than 17 percent from August 1.

The refinancing rate stood at 6.75 percent as recently as in December. It was raised to 8.5 percent on December 23 following the dram’s considerable depreciation caused by falling remittances from Russia. Although the dram’s exchange rate remained stable in the following weeks, the key rate reached 9.5 percent in January, with the CBA citing “high inflationary expectations” fueled by the weaker dram. The bank raised it further to 10.5 percent in February.

The dram’s value against the U.S. dollar has barely changed so far this year. Some analysts fear that the Armenian currency could again come under pressure as a result of a renewed weakening of the Russian ruble widely attributed to a continuing fall in oil prices.

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