Javadyan: Armenia’s financial sector able to resist shocks

He said deep structural economic and political changes in the world and the region affect Armenia’s economy. 

“However, the Armenian economy has its own peculiarities, and in this context impacts from Russia’s economy or problems of this country’s banking sector can’t fully reflect upon our economy - it is impossible,” Javadyan was quoted by the regulator’s press office as saying at the event. 

The head of the central bank stressed that the recent fever at Armenia’s forex market was tamed ahead of New Year holidays. 

“Our citizens and economic entities are still skeptical about things in the first months of the next year, but the steps we are taking pledge stability at the financial market,” he said. 

Fever at Armenia’s forex market began on November 24, when the dollar surged 16.6 percentage points to 435 drams hitting its record high in eight years. 

After the dollar hit a new record high on December 17, jumping 36.86 percentage points against the national currency to 527.20 drams, it shed 30.2 percentage points on the next day to 497 drams and the dram started recovering gradually thanks to the measures taken by the central bank and the government, but volatility still remains at the forex market. 

The dollar traded at 461.58 drams on Saturday. In his speech, Javadyan also thanked those citizens and companies “who trust the dram – one of the most important symbols of our independence”. 

“I want to refer to independent international experts, who say that the Armenian dram is one of the most accomplished currencies in developing countries, especially among our region’s countries,” he said. “Those who showed confidence in our national currency and refrained from unjustified deals shielded themselves from foreign exchange losses.” 

Javadyan said that now many economic entities are trying to fuel fear of the dram devaluation to mitigate the damage their own jobbing with currencies inflicted on them. 

He said that new approaches and flexibility are needed to meet global challenges and strengthen the basis for a long-term sustainable economic growth. 

“It was impossible to resist the recent month’s spontaneous developments only by standard approaches,” he said. “We understand that we act in a new environment in which quick changes in public behavior should be taken into account as well.” 

The head of the central bank also said that the regulator was consistently lowering the refinancing rate throughout 2014 in an effort to ensure a long-term economic growth and stable prices to the country. 

“The development we faced by the end of this year have changed our policy, and today we can say that we have managed to curb the financial market’s excessive resonance and to cushion inflation pressures,” Javadyan said. «This process was accompanied by a close cooperation with other governing agencies and international financial organizations.» 

On December 23, the Central Bank of Armenia raised the refinancing rate by 1.75 percentage points to 8.5%. Before that, the regulator changed the rate on August 12 by lowering it from 7% to 6.75%. 

In the government budget for 2014, economic growth is projected at 5.2%, and in the 2015 budget GDP real growth is projected at 4.1%. Inflation is projected at 4% (±1.5%) in both 2014 and 2015 budgets. ---0----