By Atom MarkarianThe U.S. dollar has rallied in the Armenian financial market after President Robert Kocharian demanded “resolute actions” from the Central Bank to stop its drastic depreciation against the national currency, the dram.
Meanwhile, the bank’s chairman, Tigran Sarkisian, revealed on Monday that a financial inspection of dozens of currency exchange offices in Yerevan has found widespread violations of trading regulations by their owners. Sarkisian, who has maintained until now that this year’s surge in the dram’s value is solely market-based, admitted for the first time that speculative dealing has also been at play.
The remark echoed concerns voiced by Kocharian at a meeting on Friday with members of the Central Bank’s governing board. He told them to tackle “speculative activities” which he said contributed to a 6 percent drop in the dollar’s value against the dram during the first week of this month.
One dollar was trading at an average of 470 drams before the meeting and rebounded to over 500 drams by Saturday afternoon before stabilizing at approximately 485 later in the day. The exchange rate remained unchanged on Monday. It is not known if there was any monetary intervention by the Central Bank.
“Taking advantage of expectations regarding the dram-dollar exchange rates, some market players are also trying to make disproportionate profits by engaging in speculative games,” Sarkisian told reporters, referring to currency traders in downtown Yerevan.
Sarkisian indicated that about 40 currency exchange bureaus were inspected by Central Bank officials in the course of last week and will likely be sanctioned for illegal cash operations. “Instead of providing services to citizens, they serve the shadow economy,” he said. “We have registered accumulation of large sums not registered in their books.”
An Armenian pro-government daily accused the traders on Friday of colluding with commercial banks and large-scale importers of foreign commodities.
Sarkisian at the same time stood by his view that the dram’s 15 percent rise against the dollar since the beginning of this year has resulted, to a large extent, from the greenback’s worldwide weakening. “The dollar’s depreciation is a global trend and the events taking place in our market are characteristic of all countries of the world,” he said.
(Photolur photo: Tigran Sarkisian.)