December 05
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The depreciation of the Armenian dram against the dollar, which is observed today, is mainly due to objective reasons, although there is a subjective factor as well, former member of the Armenian National Assembly, economist Vardan Bostanjyan told Armenian

"Under the numerous sanctions against Russia, economic entities running their activities in foreign currency are looking for places to sell their accumulated currency. Armenia has become and still remains one of those places," he said.

Foreign currency, as a special commodity, has quantitatively increased in Armenia and an increase in quantity of a commodity leads to a decrease in its price. That is, the amount of dollars in Armenia at the moment is greater than what is needed.

According to Bostanjyan's assessment, the current devaluation of the dollar against the Armenian dram is due to the very reason described above.

"Since there are no signs yet that the current situation will not continue (confrontation between Russia and the West - Ed.), the processes in terms of the Armenian dram will continue.

Financial institutions, including the Central Bank of Armenia, apply all the tools at their disposal to mitigate the negative consequences of currency fluctuations on economic entities, but the use of these tools has limits, beyond which they start to lose their high efficiency.

"The help, in this case, should be an increase in the efficiency of economic policy. The problem is not solved by export or import, it is solved by increasing the level of regulation, by clarifying the relationship between government and business," added the economist.

As for the impact of the dram's revaluation, it can have a different impact depending on the type of activity: for some, it is a risk, for others - an opportunity.

"On the whole, it is not so bad for our country, but some questions may arise for certain business entities in terms of availability of resources, in terms of quality of the goods produced or services provided. But in general, exporters will be in a more favorable situation than importers," said the former deputy.

The expert does not see the possibility of lower prices of imported goods in the background of the dollar devaluation, because there is high inflationary pressure.

"This pressure can be mitigated by conducting a more effective economic policy inside Armenia, but the processes in the world are such that all countries are under inflationary pressure in one way or another," Bostanjyan said.

The USD/AMD exchange rate has decreased by almost 20% in three months. On 14 March, the exchange rate of the dollar was 514.97 drams, while on 13 June, one dollar was already worth 418.64 drams.

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