By Albert Khachatryan

The EUR average exchange rate has lately shown an upward trend and reached €1/499.72 AMD on October 6.

Over the last 12 months the highest Euro exchange rate was registered on December 4, 2009 (€1/580.36 AMD). Thereafter it began showing downward trends. In more distant past, January 2004, the EUR exchange rate reached its highest point - (€1/717.3 AMD).

The record was the result of both USD appreciation and changes in the USD/Euro exchange rate in the global market. That rise was followed by gradual EUR depreciation in Armenia. Following its rival, the U.S. dollar, the EUR exchange rate went down to (€1/390.61 AMD).

Last March saw a transition to a floating USD exchange rate, after which the U.S. dollar depreciated against the other world currencies. However, the U.S. dollar, as well as other currencies, failed to “re-establish the record” of the first half of 1990s.

The EUR appreciation in Armenia is taking place amid the U.S. dollar depreciation. By October 6, 2010, USD average exchange rate had gone down by 0.4% (during the past week), 1.09% (during the past months) and 6.35% (during the past year) respectively.

Over the past year, the USD exchange rate appreciation has been registered in some of the CIS member-countries: Russia (0.2%), Belarus (8.91%), Moldova (4.08%), and Georgia (7.88%). The opposite situation has been observed in Armenia, Azerbaijan (0.14%) and Ukraine (1.25%). During the period under review, Armenia registered the highest-level U.S. dollar depreciation against the national currency.

Traditional factors – expectations of economic progress in the EU and USA - account for changes in the Euro exchange rate against the U.S. dollar in the world currency market. Given positive changes in the economies of the EU member-states, many analysts forecast further upward trends in the Euro-USD ratio (up to 1.4). However, the forecasts may fail to come absolutely true if the United States takes effective measures to stimulate economic growth, which will build up confidence in the U.S. dollar.

The Euro exchange rate appreciation is not as important for the Armenian economy as, for example, the U.S. dollar revaluation. Foreign trade operations are normally financed in terms of U.S. dollars. So the U.S. exchange rate may stimulate either export or import. In this aspect, the Euro appreciation (short- or long-term - time will show) is of importance for citizens receiving Euros from abroad.