Artificial Rise of Dram Exchange Rate Hardly Possible: CB Chairman


YEREVAN, July 27, (Noyan Tapan). The drastic increase of the exchange
rate of the Armenian dram against the foreign currencies (includung
U.S. dollar) is conditioned by objective reasons, particularly the
augmantation of private transfers, Tigran Sargsian, Chairman of the
Central Bank of Armenia stated at the “Regional Bridge 2004”
international business-meeting held on July 24. He noted that during
this year the volume of private transfers has increased greatly
compared with the previous year – by 43%. Cash worth about $100m
enters Armenia through tourists and private transfers from abroad each
year. According to T. Sargsian, buying and selling deals worth $35-60m
are carried out in the Armenian market weekly. At least $5m needs to
be injected to affect artificially the exchange rate in such a market,
which is a great risk and that’s why “No reasonable peson would do
it”. T. Sargsian believes that the short-time appreciation of the dram
could not have an impact on the prices of goods. The changes of the
exchange rates affect the prices during a long period and the price
chnges is connected with the average exchange rate of the
year. Armenia has conducted a policy of floating exchange rate,
i.e. the state does not interfere the currency rates. Growth of prices
is paid most attention to. It made up 4.5% during the 6 months of the
current yearwith the target set at 3% growth for the year. According
to the CB Chairman, interference of the state aimed at stabilizing the
exchange rate will lead to the increase of quantity of the Armenian
dram that will stimulate infliation. The liquidity of the dram has
gone up and the domains if its use have increased recently. That’s why
the CB declined the interest rate of re-financing to 5%, the lowest
level existed so far.