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Growth of dollarization weakens Armenian dram

Growth of dollarization weakens Armenian dramJune 10, 2012 | 10:01

YEREVAN. – Due to the weakening of the Armenian dram, dollarization growth is observed in the Armenian financial market.

Banks have raised interest rates on deposits and loans to AMD while USD loan rates have not changed. Enterprisers prefer to do transactions with the US dollar as it has got a more reliable ‘reputation’. All Armenian citizens who have taken loans with the dollar and are paying them off currently incur significant losses.

To note, the growth of demand for loans in US dollars, too, in its turn, contributes to the weakening of the dram, as the business creates additional demand for currency. One of the negative consequences of the unpredictable weakening of the dram is the growth of dollarization - reducing confidence in the dram as a long-term tool.


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