The fall in world oil prices that has led to a sharp depreciation of the Russian ruble has not had any serious impact on Armenia’s financial system, according to a Central Bank representative.
Andranik Grigorian, head of the Central Bank’s Financial System Stability and Development Department, said the Armenian financial system enjoys a “fairly high liquidity”. “There is no need for panic,” Grigorian said on Wednesday. “Our banks are well capitalized and have sufficient liquidity in any currency. Investors in our financial system can rest assured both in terms of their deposits and in terms of servicing loans. Our exchange rate is a free floating one, and I don’t see anything extraordinary here.”
As for the possible depreciation or appreciation of the Armenian national currency, the dram, against other currencies, Grigorian said that the Central Bank has been conducting various analyses to understand the potential impact of both trends. “In both cases we can say that our system is quite liquid,” he added.
The Central Bank official said the closed border with Iran due to the new coronavirus infection has not yet had any impact on Armenia’s financial system, but cautioned that certain risks are always present when borders are closed – “be it in Armenia, Germany or the United States.”
“For the time being we do not see any problems here. Our financial system does not have that level of related assets for the closed border with Iran to lead to problems in it,” Grigorian added.
The Ministry of Economy declined to comment on the possible impact of the closed border with Iran on the Armenian economy in general.
Economist Vahagn Khachatrian believes, however, that a closed border with the neighboring country cannot but have a negative effect on Armenia’s economy. “We all understand that a closed border means that there will be problems. It is clear that there will be some impact and that impact will be negative. Here we just need to be able to assess how solvable the problem will be over time,” he said.
The economist said that no business in Armenia could possibly guess in January how the situation would unfold in order to take long-term measures like storing supplies in warehouses for several months. But according to Khachatrian, it is important not to panic now and even more important for the government to take proper action through its relevant agencies.
“Entrepreneurs should be kept updated on the situation, as many are asking questions now, wondering when the border can be re-opened. But no one can make any forecasts in this matter even by following the international news. On the one hand you hear more positive news from China [on coronavirus], but news coming from European countries, especially from Italy, are more negative,” Khachatrian said.
The closed border regime with Iran is expected to be in place at least until March 24.