LONG-TERM STABILIZATION OF AMD REAL EXCHANGE RATE RECORDED FIRST

YEREVAN, JULY 27. ARMINFO. Long-term stabilization of the AMD real
exchange rate has the for the first time been recorded in Armenia this
year, President of the RA Central Bank Tigran Sargsyan told a press
conference. He pointed out that the influence of this factor on
exports and import must be considered in this aspect. The CB President
restrained from making forecasts for the second half of 2004. Sargsyan
added that last year, though the AMD nominal exchange rate got
stabilized its devaluation was 10 per cent.

The CB is currently conducting inspections at commercial banks to
reveal violations of foreign currency position and performed but not
registered operations. The CB President pointed out that no violations
of foreign currency positions have bee recorded today. According to
him, in conditions of the slump of the USD exchange rate during the
last two weeks, losses were sustained by the banks with long currency
position, most Armenian bank being such. However, despite the serious
situation on the currency market, banks were uninterruptedly serving
their clients. Sargsyan pointed out that the daily volume of financial
operations performed by Armenia’s banks is 50mln. USD.

In general, the CB accounted for the situation that developed on the
country’s currency market by the fact that US dollar flows to Armenia
in the first half of 2004 exceeded last year’s index by
50%. Specifically, transfers from abroad through commercial banks
totaled 300mln. USD in the first half of 2004 as against 200mln. USD
last year. A sharp increase in the number of transfers by means of the
international payment systems Western Union and Money Gram was
recorded. Sargsyan stressed that the liberalization of Russian
legislation (one person can take out of the country up to 10,000 USD)
allowed a sharp increase in the currency flows to Armenia, which
covers the funds received from the “Lincy” Foundation (56-60mln. USD)
last year. According to Sargsyan, the rate of increase in the volume
of transfers will be maintained until the end of the year, which is
confirmed by the much better state of the current account than was
forecast.

The CB intends to publish its position on the advisability of
long-term structural reforms. Specifically, the RA Central Bank will
present its point of view of the necessity of introducing instruments
of neutralization of long-term influence, if the AMD stabilization
continues.