Armenia’s Central Bank has a variety of tools and the necessary reserves to keep the Armenian currency market calm, Artur Stepanian, a member of the Bank’s Board, told reporters on Friday.
The statement of the official comes after the Armenian national currency – the dram – has lost about two percent of its value against the U.S. dollar since international oil prices began to fall last week bringing down the Russian ruble.
The slow depreciation of the dram also proceeded against the backdrop of a novel coronavirus outbreak in Armenia that led the country’s authorities to declare a 30-day state of emergency on March 16.
At most exchange offices in Yerevan today one U.S. dollar could be purchased for 498 drams.
Asked whether he saw a risk of national currency devaluation in conditions of the ongoing crisis, the Central Bank Board member said: “In keeping with our floating exchange rate policy, we have a versatile and diverse set of instruments and we know what the level of reserves the Central Bank has. When there are undesirable developments or when volatility increases, we will take adequate action in the market, and I think we will be able to keep the currency market very calm as it was in December 2014.”
Despite the fact that six years ago Armenia’s monetary authorities managed to restrain a deeper fall of the national currency, the Armenian dram still lost 20 percent of its value against the U.S. dollar in that crisis. In a country like Armenia that heavily depends on imports a depreciating national currency entails higher prices.
In this regard Stepanian said: “If you look at the inflation statistics for the past 5-10 years, you will see that we are one of the countries with the lowest inflation rates, even taking into account the certain currency devaluation in 2014, which did not have a significant impact on inflation, that is, on people’s purchasing power. As for the exchange rate, I already said that we will adhere to our floating exchange rate policy, but we are ready to use our toolkit during every unfavorable development to calm the financial markets.”
Stepanian added that the Central Bank carries out daily monitoring of the economy and financial markets.