The Central Bank of Armenia (CBA) urged the population and businesses to avoid panic buying of U.S. dollars on Tuesday following a renewed depreciation of the national currency, the dram, widely attributed to Russia’s deepening economic woes.
The dram has lost an additional 1.7 percent of its value against the dollar at the close of trading at Yerevan’s NASDAQ OMX stock exchange. It tumbled to 460 drams per dollar early in the afternoon before rallying to just over 442 drams per dollar.
The Armenian currency had already weakened by 4.5 percent in a matter of days late last month. At roughly 435 drams per dollar, its exchange rate was virtually unchanged from November 25 through the end of last week.
The dram’s weakening resumed on Monday as international oil prices hit five-year oils, causing a further sizable depreciation of the Russian ruble. The ruble lost more ground to the dollar and the euro on Tuesday, meaning that multimillion-dollars remittances from Armenians working in Russia will likely drop further, in real terms, in the coming weeks.
Those remittances have long enabled Armenia to finance its huge trade and current account deficits. Hence, their significance for the dram’s market value.
The CBA blamed the latest exchange fluctuation on unspecified “developments in international markets and the region” which it said have fuelled unfounded “expectations in the domestic currency market.” In a statement, it warned against “currency speculations and undue conversions,” saying that financial stability in Armenia is not at risk.
“The Central Bank reckons that these phenomena have a short-term character and affirms its readiness to stabilize the situation in the market with all instruments at its disposal,” said the statement. It insisted that the bank has sufficient hard currency reserves to keep the situation under control.
The bank did not clarify whether it stepped in to shore up the dram earlier in the day. Official data on its hard currency interventions during Tuesday’s NASDAQ OMX trading will not be made available before next Monday.
According to the Yerevan daily “Haykakan Zhamanak,” the Central Bank injected over $92 million in the market from November 3-25.