By Shakeh Avoyan
Some of Armenia’s leading exporters expressed concern on Tuesday about the mysterious appreciation of the national currency, the dram, against the U.S. dollar and the euro which again accelerated last week.
Top business executives affiliated with the Yerevan Chamber of Commerce warned that a further rise in the dram’s value would hit hard their companies and stifle the country’s modest exports. Some of them said they have already incurred losses as a result of the more than year-long trend.
The dram’s exchange rate rose from 450 to 430 per dollar in the course of last week, making it nearly 10 percent stronger against the greenback than at the beginning of this year. The dram has gained almost 30 percent in value set against the dollar since the start of its appreciation early last year. It has strengthened against the European Union’s single currency at about the same rate.
“If this trend continues I think that we will suffer big losses,” said Sergo Karapetian, the chief executive of an export-oriented food processing company in the southern town of Artashat. “We are therefore trying to boost our sales in the local market.”
“The Central Bank chairman tells us that we must be happy that our national currency is gaining in value. Of course we are happy, but not with such big fluctuations,” Karapetian told RFE/RL.
A senior executive of a coffee processing and packaging firm called Royal Armenia was also unhappy. “We too export things and suffer losses,” he said.
Armenia’s government and Central Bank attribute the unprecedented phenomenon to the worldwide weakening of the dollar and a surge in dollar remittances from Armenians working abroad. President Robert Kocharian defended this explanation at a meeting with university students last week, indicating that the authorities will not intervene to weaken the dram.
“All complaints should be addressed to the U.S. government,” Kocharian said. “Tackling that phenomenon would be senseless because the U.S. economic might is so great.”
However, economists critical of Kocharian and his administration dismiss such arguments, insisting that the dram’s strengthening was engineered by the Armenian authorities to benefit government-connected large-scale importers of fuel and other basic commodities. The argue that the multimillion-dollar remittances to Armenia are traditionally weak in winter months and point to the fact that the dollar has rallied in the international currency markets this year.
Analysts also blame the strong dram on last year’s considerable slowdown in the growth of Armenian exports which is seen as indispensable for continued economic growth in the impoverished country. Finance Minister Vartan Khachatrian admitted that the exchange rate changes have affected at least some of the exporters.
Also expressing “big reservations” about the official theory was Armen Darpinian, Armenia’s former prime minister largely loyal to Kocharian. In a newspaper interview earlier this month, Darpinian laid the blame on the Armenian Central Bank, describing it as a “structure serving private interests.”
Another fact cited by critics is that the prices of key imported goods have hardly fallen over the past year. Abraham Manukian, a parliament deputy and businessman involved in import-export operations, could not explain this phenomenon. “The dollar keeps falling but goods are not becoming cheaper, which is very surprising,” he said.
“Prices have actually gone up,” said Tsolvard Gevorgian, chairwoman of the Armenain Union of Traders. “This is a very weird phenomenon.”