Economy 19:33 23/11/2020 Armenia

MP Arkady Khachatryan: Devaluation of dram conditioned by uncertainties, recent political developments

After the start of the war in Artsakh, Armenia's national currency, the dram, has been steadily declining.

On September 27, the highest buying rate of a US dollar was 485.32 drams, while it rose to 503.00 drams on Monday, November 23, with the lowest selling rate standing at 509.00 drams. The selling rate of a euro reached 606.00 drams.

The devaluation of the dram could not go unnoticed and it has already affected mainly the prices of imported goods. At present, the prices of primary consumer goods such as flour and butter have increased in the market. The prices of chicken eggs have also risen, which is directly linked to the price of imported feed.

Speaking to Panorama.am, Bright Armenia MP Arkady Khachatryan, Chairman of the National Assembly Standing Committee on Financial-Credit and Budgetary Affairs, attributed the devaluation of the dram to the fact that the financial markets are very sensitive to any uncertainties, instability or unpredictability.

"First of all, it is conditioned by the behaviors of economic entities and individuals, changes in their expectations," Arkady Khachatryan said, adding that in the spring when a state of emergency was declared in Armenia due to the coronavirus epidemic, certain fluctuation was also registered, with the dollar exchange rate reaching 510 drams, but it gradually dropped to the previous rate.

"In this case, we are dealing not only with a decline in economic activity due to coronavirus, but also with a decline in economic activity due to the martial law and increasing uncertainties, unpredictable risks stemming from both this situation and the recent political developments," he said.

According to the lawmaker, all these factors cause uncertainties and risks, to which economic entities and citizens react in a different way, with some of them exchanging drams for dollars, which leads to the devaluation of the dram.

Asked about a possible solution to the problem, Arkady Khachatryan stressed that in such cases it is essential to ensure political stability as soon as possible, which will contribute to the restoration of economic activity and the return of business activities to normal.

Noting that the main task of the Central Bank is to ensure price stability, the parliamentary committee chair emphasized that it targets inflation, not the dollar exchange rate.

"Inflation currently stands at 1.5 percent, it will reach 2.3-2.5 percent by the end of the year, so we have no concerns over the inflation rate at the moment," Khachatryan said.

According to him, the exchange rate is often reflected in the financial market, which can increase instability and inflationary pressure, in particular, creating problems for people whose loans are in foreign currency, increasing the cost of servicing their loans. Arkady Khachatryan pointed to the rise in prices of imported goods among the negative effects of the devaluation.

In the meantime, the MP said that the devaluation of the dram creates favorable conditions for exports.

"We repeatedly state that for the economic development of the country, it is crucial to have export-oriented economic growth, which means that exports must exceed imports at a faster pace. As a result of the mere growth of exports, we will register an increase in gross domestic product. Therefore, export companies should make use of this opportunity, because it creates more favorable conditions for developing their businesses and increasing the volume of exports,” Khachatryan said.

But to do it, according to the MP, it is extremely important that Armenia's economic uncertainty be reduced and the environment become reliable, predictable and stable for business.

"It is necessary to increase economic activity and to bring back the economic life to normal, which necessarily requires creation of an atmosphere of public solidarity and settlement of political instability as soon as possible," the lawmaker stated.

The press service of the Central Bank told Panorama.am that they do not see any significant risks for inflation and financial stability due to the devaluation of the dram, adding if such risks emerge, they will use their tools to counteract them.

In the face of unprecedented negative consequences of the ongoing pandemic and the war, the Central Bank announces that it is not going to interfere in the developments in the foreign exchange market, as stable, low and manageable inflation is registered in Armenia.

The Central Bank considers the devaluation of the dram and the increase in prices normal. If the latter reaches an uncontrollable level, the Central Bank will use its main tool, i.e. it will change the refinancing rate.

Under the current situation, it is not clear how likely it is that the Central Bank will reduce the refinancing rate again. It should be noted that at the October 27 Board meeting, the Central Bank decided to leave the refinancing rate unchanged at 4.25%. It was last lowered to handle the economic impact of the coronavirus epidemic.

At a time when the economies of Armenia and Artsakh were dealt an unprecedented blow by the war, large amounts of resources were invested in hostilities and the coronavirus pandemic persists, only time will tell how adequate the steps taken by the state against the deepening of the crisis are.



Source Panorama.am
Share |
Տեքստում սխալ կամ վրիպակ նկատելու դեպքում, ուղարկեք խմբագրին հաղորդագրություն` նշելով տվյալ սխալը, այնուհետև սեղմելով Ctrl-Enter:

Newsfeed

13:36
Orban says he will invite Netanyahu to Hungary after ICC warrant
Prime Minister Viktor Orban said on Friday he would invite Israeli Prime Minister Benjamin Netanyahu to visit Hungary, saying he would guarantee...
13:11
Temps to plummet in Armenia
Clear weather is expected in Armenia's regions on Friday and over the weekend. Rain and snow are forecast for most parts of the country...
12:32
Alexis Ohanian showcases rare Armenian coin
Reddit co-founder Alexis Ohanian has showcased a rare Armenian coin from 95 BC featuring Tigranes the Great, a famous Armenian king....
12:16
German foreign minister criticizes Azerbaijan's human rights record
German Foreign Minister Annalena Baerbock criticized the human rights record of Azerbaijan during her first appearance at the UN Climate Change...
12:06
Minister shares new images captured by Armenia's first satellite
Armenia's Minister of High-Tech Industry Mkhitar Hayrapetyan has shared new satellite images from orbit captured by ARMSAT-1,...
11:36
World Cadet Chess Championship passes its halfway mark
The 2024 World Cadet Chess Championship has passed its halfway mark in Montesilvano, Italy. After 6 rounds, in the Open 12 category CM...
11:15
Iran to launch 'new and advanced centrifuges' in response to IAEA censure
Iran said Friday it would launch a series of "new and advanced" centrifuges in response to a resolution adopted by the IAEA that...
11:00
Armenian, Iranian foreign ministers hold phone call
Armenian Foreign Minister Ararat Mirzoyan on Thursday had a telephone conversation with his Iranian counterpart Seyed Abbas Araghchi....
17:07
Winter military draft starts in Armenia on November 25
The winter conscription for compulsory military service starts in Armenia on November 25 to run through January 31, 2025. The...
16:45
Russian spokeswoman told not to comment on ballistic missile strike live on air
Russia's foreign ministry spokeswoman Maria Zakharova received a phone call during a live press briefing on Thursday telling her not to...
16:33
Belgian politicians call for immediate release of all Armenian prisoners held in Baku
In the backdrop of the COP29 currently taking place in Baku 20 members of the Belgian Federal Parliament, the Flemish Parliament, the Walloon...
16:06
Armenia thwarts large-scale drug smuggling attempt
Officers of Armenia’s State Revenue Committee (SRC) have foiled an attempt to smuggle some 1,600 grams of cocaine into the country as part...
15:33
Armenian government reduces financial aid for Artsakh refugees
The Armenian government on Thursday approved a decision to reduce financial aid for the displaced Artsakh Armenians. Starting from...
14:45
Percival Everett wins National Book Award
Percival Everett has won the $10,000 National Book Award for fiction, one of the US’s most prestigious literary prizes, for James, his...
14:35
Pyunik v West Armenia match canceled
An Armenian Premier League match between FC Pyunik and West Armenia has been canceled. The 17th round match was scheduled for November 21....
14:06
Armenian Foreign Ministry denies cooperation with Azerbaijan on water management
Armenia’s Foreign Ministry has denied claims of cooperation with Azerbaijan on transboundary water resources management. In a social...
13:36
No rain in sight for rest of the week
Clear weather is expected in Armenia's regions from Thursday to Sunday.  Rain and snow are forecast for most parts of the country...
13:06
Pashinyan thanks dismissed officials for cooperation
Armenian Prime Minister Nikol Pashinyan expressed gratitude to the dismissed top government officials for joint work and wished good luck to...
12:36
Armenian church marks Presentation of Virgin Mary
The Armenian Apostolic Church celebrates the Presentation of the Blessed Virgin Mary on Thursday, November 21. According to tradition,...
12:15
Luxembourg's parliament demands immediate release of all unlawfully imprisoned persons in Azerbaijan
Luxembourg’s Chamber of Deputies has adopted a resolution condemning the Azerbaijani government’s sanctions against the freedom of...
12:00
Davit Khudatyan appointed minister of territorial administration
Armavir Governor Davit Khudatyan has been appointed Minister of Territorial Administration and Infrastructure. Armenian President Vahagn...
11:45
Australia launches bill to ban social media for children under 16
Australia's centre-left government on Thursday introduced a bill in parliament that aims to ban social media for children under 16 and...
11:30
Armenia's Andranik Avetisyan wins gold at World Military Wrestling Championships
The 37th World Military Wrestling Championships kicked off in Yerevan, Armenia, on Wednesday, bringing together 400 participants...
11:10
Leopard missing for two years spotted in Armenia's Tavush
A leopard, that lost its front paw and disappered from Armenia's Vayots Dzor Province in December 2022, has been spotted in...
17:09
Armenian political analyst warns of risk of nuclear war
Political scientist Stepan Danielyan has warned of an imminent threat of nuclear war after the Russian nuclear doctrine change. President...
16:45
Rain, snow expected in parts of Armenia
Rain and snow are forecast for some parts of Armenia on Wednesday, overnight Thursday, late on Sunday and next Monday. Clear weather is...
16:22
GM Robert Hovhannisyan qualifies for FIDE World Cup
The European Individual Chess Championship 2024 has concluded. GM Aleksandar Indjic from Serbia became the champion, scoring 9 points...
15:46
Cher reveals she lost her virginity at 14 to get revenge on boyfriend
Cher has revealed she lost her virginity at age 14 as an act of revenge against her teenage boyfriend, The Independent reports. In part...
15:32
Political analyst: Azerbaijan transported weapons to Nakhichevan 5 times in 4 days
Political analyst Sergei Melkonian, a research fellow at the Applied Policy Research Institute (APRI Armenia), says Azerbaijani planes carrying...
15:04
Azerbaijan attempts to distort Energy Charter goals in lawsuit against Armenia
Azerbaijan is attempting to distort the content and goals of the Energy Charter Treaty by trying to link it to the Nagorno-Karabakh conflict,...

Follow us and get updates!

Most popular articles

{"core.blocks.header.spell_message1":"Selected mistake: ","core.blocks.header.spell_message2":"Send a message about the mistake?"}