By Ruzanna KhachatrianThe chairman of Armenia’s Central Bank, Tigran Sarkisian, insisted on Tuesday that the renewed strengthening of the national currency, the dram, against the U.S. dollar is the result of “market factors” and not government manipulation.
“Under our floating exchange rate policy, the dram’s exchange rate is decided by the market, and the market factors are numerous,” he said.
The dram has gained almost 9 percent in additional value against the dollar in less than a month and is now worth over 30 percent more, in dollar terms, than it was right before the start of its dramatic appreciation in late 2003. The Central Bank attributed this to a sizable increase in multimillion-dollar remittances from hundreds of thousands of Armenians working abroad.
Sarkisian said a further rise in their amount this year has boosted demand in the dram and pushed up its value as a result. He also claimed Armenians are converting their dollar savings into drams en masse because they have finally begun to trust their currency.
However, leaders of Armenia’s main opposition parties dismissed this explanation, renewing their allegations that the dram’s appreciation was engineered by the Armenian with the aim of further enriching a handful of government-connected businessmen that enjoy a de facto monopoly on imports of fuel and other basic commodities. Addressing the Armenian parliament, they said the wealthy importers and their government sponsors have already made hundreds of millions of dollars in additional profits.
“As a result of an artificial appreciation of the dram, the republic has been robbed of as much as $460 million,” charged Artashes Geghamian of the National Unity Party. “The guys are preparing for elections and those elections [due in 2007 and 2008] will be fierce.”
The dram’s strengthening has hit hard a large part of Armenia’s population which is dependent on cash regularly sent by their expatriate relatives. Some analysts say it is also stifling the country’s modest exports. Official statistics show their total volume falling by nearly 8 percent to $253.7 million in the first four months of this years. Armenian imports, by contrast, rose by 13 percent to $584 million during the same period.