By Atom Markarian
The Armenian national currency, the dram, has appreciated in value against the two main Western currencies over the past two weeks due to a host of factors, including weaker demand in the U.S. dollar.
The dram has strengthened against the dollar and euro by roughly 3 percent since the entry into force on July 1 of a government decision banning all business transactions in cash that exceed 100,000 drams ($175). Businesses now have to carry them out through bank transfers.
The new rules, which are aimed at curtailing the huge informal sector of the Armenian economy, appear to be complicating cash deals made in dollars. Those still cover a large part of economic activity in Armenia, despite the dram’s domestic convertibility and a relatively stable exchange rate.
Analysts also attribute the dram’s strengthening to the seasonal factor, saying that economic turnover across the country traditionally declines in the summer. They say the Armenian currency will continue to gain ground in the coming weeks.
Also strengthening the dram is the fact that the summer period sees the greatest influx of tourists and other visitors from abroad who arrive in Armenia with hard currency. According to official figures, over 160,000 foreign nationals, mainly Diaspora Armenians, visited the country last year.