DRAM DEBACLE: ARMENIAN CURRENCY HITS NEW LOW AMID UPBEAT GOVERNMENT STATEMENTS
ECONOMY | 18.12.14 | 11:00
By GAYANE MKRTCHYAN
ArmeniaNow reporter
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The Armenian national currency, the dram, continued its dramatic fall
on Wednesday amid assurances from top government officials that the
financial market situation will stabilize soon.
With new lows of well above 550, the dram has not even been exchanged
for hard currencies at most commercial banks in Yerevan since
yesterday. Meanwhile, many stores stayed closed for the second day,
and others had to change price tags every hour following news from
the currency market and responding to the depreciation of the dram.
(Because Armenia is a mostly importing country the foreign exchange
rate highly influences retail prices that tend to grow when the
national currency weakens).
Representatives of the government, however, insisted that the apparent
panic on the currency market is groundless and within a few days the
dram will start regaining its value.
Late on Wednesday, the Armenian parliament held a closed-door
discussion on the situation that has threatens to paralyze the
country’s already struggling economy.
Finance Minister Gagik Khachatryan found it difficult to say
precisely how long the situation will last as he spoke to media
after the meeting. He said that Armenia is not the only country in
the world affected by currency market turbulence these days. Still,
Khachatryan insisted that the situation has not spiraled out of
control, but admitted that the process of recovery will not be as
speedy as the decline.
Parliament Speaker Galust Sahakyan, who represents the ruling
Republican Party of Armenia, too, blamed the situation on “force
majeure”, saying that it cannot serve as grounds for the government’s
resignation. “Different processes take place and no country was
possible to predict such a situation. Does it mean the whole world
should resign?” he said.
Nevertheless, the situation has become particularly grave for farmers
who had their bank loans in dollars. Hrach Berberyan, president of
the Agrarian-Rural Union of Armenia NGO, blames the Central Bank (CB)
for the created situation, saying that the CB must freeze farmers’
loans before the situation gets stable, because it was a very difficult
year, and the farmers are in an unimaginable situation.
“Let them turn to the National Assembly and conduct studies with the
help of the board, and they will see how this situation affects the
villagers. Many villagers took one-million dram loans from the state
and they had to pay back the loan this December to take another loan
again,” Berberyan said.
The current market instability that economists say originated in
Russia and spread to Armenia makes many Armenian migrant workers face
a dilemma as well. Many of them usually return home right before the
New Year holidays and go back to Russia in January.
Vahagn Petrosyan, 50, from Echmiadzin, has just returned from Moscow.
He says that his work of the whole year has proved in vain because
of the ruble devaluation (the Russian currency has lost more half of
its value in recent months).
“It turns out that I worked for only six months, the money fell for
that much. It is an awful situation. If the Russian economy collapses
I have no idea where else we will be able to find work, how we are
going to support our families. Look at the prices rising each day,”
Petrosyan complains.
Karo Sahakyan, 47, said that he could barely buy the plane ticket and
come to Armenia. They will send the money later, because they could
not pay.
Late on Wednesday the dram in Armenia began to regain some of the
ground on the news from Russia where a rare reverse trend was observed
for the ruble.
Later, after the closed-door parliamentary meeting, Speaker Sahakyan
also spoke about “reverse tendencies”.
“Moreover, we had news that world oil prices have started to go up.
There are certain changes both in the region, particularly in Russia,”
he said.
http://armenianow.com/economy/59462/armenia_dram_depreciation_exchange_rate