Armenian dram devaluation to help local manufacturers, WB says

YEREVAN, March 6. /ARKA/. Devaluation of the Armenian dram will boost local manufacturers’ business, WB Country Manager Aristomene Varoudakis said on Wednesday, adding adjustments in currency exchange rate would help Armenian companies boost exports and profitability.

This year, the global financial recession hit Armenia and its main partners the CIS and EU, with local exports dropping 24.5% in January, the WB official said.

All this happens amid the 2009 gloomy forecasts, Varoudakis added.

He pointed out the global plunge in copper and molybdenum prices, with Armenian copper and molybdenum exporters suffering the most.

According to Varoudakis, the exchange rate set by the Central Bank of Armenia (CBA) can help local companies to withstand competition as imports prices go up.

He did not say how much exports would grow after CBA adjusted the exchange rate.

WB has long advised CBA to return to the floating exchange rate policy, Varoudakis said.

During the Tuesday special session, the CBA Board decided to return to the floating exchange rate policy, in view of the ongoing aggravation of trade conditions and the global financial and economic crisis, as well as the slowdown in capital inflow.

With the Armenian dram devaluating sharply due to the retrieval of the CBA floating exchange rate policy, the U.S. dollar exchange rate this year is expected to range from AMD 360 to AMD 380 per $1.

Armenia’s foreign trade turnover dropped 24.5% year-on-year to 77.9bln drams in January 2009. Exports totaled 10.4bln drams or $34.2mln (43.9% drop), while imports amounted to 67.5bln drams or $220.1mln (20.2% drop).

As a result, red ink of the country’s trade turnover reached 57.1bln drams or $185.9mln (56.5bln drams without humanitarian aid). Z. Sh. –0--