By Shakeh AvoyanArmenia’s national currency, the dram, has gained more in value against the U.S. dollar and other major foreign currencies over the last two weeks, continuing a four-month trend which analysts attribute to increased inflows of cash from abroad.
The dram was trading at an average of 538 per dollar in Yerevan’s currency exchange bureaus on Wednesday, its highest market-based exchange rate since September 2000. The dollar was worth 564 drams as recently as last February. The European Union’s currency, the euro, has similarly slumped from 724 drams to 655 drams during the same period.
The Armenian Central Bank continued to insist that it has no role in the currency fluctuations. “The factor affecting the exchange rate most is a greater influx of foreign currency from private individuals and legal entities,” its spokeswoman, Zaruhi Barseghian, told RFE/RL.
Barseghian said summer is a traditional peak period of visits to the country by scores of Armenian nationals working abroad as well as Diaspora Armenians. She also argued that Armenian businesses have registered a further surge in exports in the course of this year which boosted their hard currency earnings.
Ararat Ghukasian, the deputy manager of the country’s biggest commercial bank, HSBC Armenia, likewise cited a major increase in foreign direct and indirect investments over the past year. “There is more dollar supply than demand in the market,” he told RFE/RL. “The inflow of foreign currency into the country is probably bigger what our economy can digest.”
Some currency traders in Yerevan offered a confirmation of this assessment. “The dollar doesn’t sell well these days,” said one of them.
The dram’s relative strength may be further cemented by multimillion-dollar loans which the World Bank, the International Monetary Fund and other Western donors continue to extend to the Armenian government. It is also helped by continuing economic growth which the government says stood at 9 percent in the first four months of 2004.