Armenian central bank expects no serious fluctuations of dram’s exchange rate
30.09.2016,
19:03
Armenia’s Central Bank does not expect major fluctuations of the national currency’s exchange rate, Vahagn Grigoryan, the head of the monetary policy unit at the Central Bank, said today.
YEREVAN, September 30. /ARKA/. Armenia’s Central Bank does not expect major fluctuations of the national currency’s exchange rate, Vahagn Grigoryan, the head of the monetary policy unit at the Central Bank, said today.
The sharp devaluation of the Armenian currency began in November 24, 2014, when the US dollar rose by 16.6 points to 435 drams; on December 17 the US dollar reached the 10- year highest trading at 527.20 drams.
After the Central Bank and the government took a string of measures to stabilize the situation on the currency market, the Armenian dram began to strengthen. Today, the US dollar trades at 474.57 drams. Grigoryan recalled that the Central Bank has repeatedly stated its commitment to the floating exchange rate policy saying the regulator intervenes only when there are sharp and short-term fluctuations.
Speaking about the situation in 2014, he said it was triggered by ‘behavioral’ changes, including inflation expectations of individuals as a result of which they began to buy foreign currency.
"Such expectations have significantly reduced over the past two years, allowing the Central Bank to cut the refinancing rate. Moreover, we do not expect a repetition of the 2014 scenario," said Grigoryan.
On September 27 the Central Bank decided to cut its refinancing rate by 50 basis points (bp) to 6.75% to stave off deflation, which deepened from 1.3% y/y in July to 1.9% y/y in August.
Following the 14% depreciation of the dram in December 2014 Armenia has enjoyed relative monetary stability in recent years. As such, inflation has remained within the government's target of 2.5% to 5.5%.
Over the past six months, however, consumer prices have stayed in negative territory, prompting the regulator to cut key rates five times between March and August, lowering it from 8.75% in March to 7.25% in August or by 25 bp in each intervention. -0-
The sharp devaluation of the Armenian currency began in November 24, 2014, when the US dollar rose by 16.6 points to 435 drams; on December 17 the US dollar reached the 10- year highest trading at 527.20 drams.
After the Central Bank and the government took a string of measures to stabilize the situation on the currency market, the Armenian dram began to strengthen. Today, the US dollar trades at 474.57 drams. Grigoryan recalled that the Central Bank has repeatedly stated its commitment to the floating exchange rate policy saying the regulator intervenes only when there are sharp and short-term fluctuations.
Speaking about the situation in 2014, he said it was triggered by ‘behavioral’ changes, including inflation expectations of individuals as a result of which they began to buy foreign currency.
"Such expectations have significantly reduced over the past two years, allowing the Central Bank to cut the refinancing rate. Moreover, we do not expect a repetition of the 2014 scenario," said Grigoryan.
On September 27 the Central Bank decided to cut its refinancing rate by 50 basis points (bp) to 6.75% to stave off deflation, which deepened from 1.3% y/y in July to 1.9% y/y in August.
Following the 14% depreciation of the dram in December 2014 Armenia has enjoyed relative monetary stability in recent years. As such, inflation has remained within the government's target of 2.5% to 5.5%.
Over the past six months, however, consumer prices have stayed in negative territory, prompting the regulator to cut key rates five times between March and August, lowering it from 8.75% in March to 7.25% in August or by 25 bp in each intervention. -0-
