ARKA News Agency
Dec 9 2004

ON DEC 1-9 NOMINAL EXCHANGE RATE OF ARMENIAN DRAM STRENGTHENED IN
RESPECT TO ALL FOREIGN CURRENCIES

YEREVAN, December 9. /ARKA/. On Dec 1-9 nominal exchange rate of
Armenian dram strengthened in respect to all foreign currencies,
quotes on which are set by CBA. According to analysis of ARKA News
Agency, Canadian dollar lost its positions compared to Armenian dram,
its rate decreased by 6.27% in Dec 1-9 (395.53 AMD). Australian
dollar goes next – by 5.82%, to 366.1 AMD, Argentinean peso – by
5.21% to 161.08 AMD.
Currencies, most important to participants of financial market of
Arenia, i.e. USD and Euro, weakened their positions during such a
short period of time. Thus, exchange nominal rate of AMD to USD made
478 per $1, i.e. by 22.05 AMD or 4.41% more than on Dec 1, 2004. Note
a year earlier, on Dec 9, 2003 $1 was equal to 566.53 AMD. Exchange
rate of AMD to Euro since the beginning of the month strengthened by
4.37% or by 29.08 AMD and today it costs 635.74 AMD. A year ago 1
Euro cost 692.19 AMD.
The fact of strengthening of Armenian dram to Russian ruble is also
interesting. Since the beginning of December ruble in Armenia
weakened by 3.77%, to 17.09 AMD per ruble, while as of Dec 9, 2004, 1
ruble cost 19.17 AMD.
Analysis of foreign exchange market sale-purchase rates by the banks
gives more surprising picture: pretty serious margin between purchase
rate and sale rate of foreign exchange. Today it achieves 25 AMD
during trade of USD and sometimes even more in trade with Euros. Such
a serious margin usually took place in the country in more serious
variation of rates in conditions of not created foreign exchange
markets in the beginning of transition period. In `normal’
conditions, namely in the beginning of 2004, margin in trade with USD
ranged between 2-7 AMD. On request of ARKA to explain the reason to
such a big difference between sale and purchase rates, the dealers of
some commercial banks said that they go for this because average rate
really makes 460 AMD per $1, at the exchange rate of CBA in 478 AMD.
That is why the banks had to increase the margin to minimize currency
risks and receive income from foreign exchange operations in account
of rate difference. Otherwise the banks would have losses.
Thus, most of the dealers, though do not exclude future strengthening
of AMD in the beginning of the next year, do not give the forecasts
in short-term perspective. No one of them gives any comments,
explaining it that existing situation `does not have any logics, and
it is outside of all economic laws’. Everything depends on what will
take place at international financial markets, what moods and trends
will be created there, what inflation and what macroindicators will
be created in USA and European countries. It is also noted that not
the last role in rate trends was played by not so much by exporters,
but large investments in Armenia. Nevertheless, part of the dealers
expressed opinion that fast decrease of USD rate in last days and in
the future more than likely won’t take place. At this, dealers note
serious volumes of sale-purchase deals at foreign exchange market of
Armenia. Along with that on the threshold of holidays Armenia
continues receive large private transfers and mostly in USD. At this,
received assets immediately turn to drams for making purchases.
Note that in the beginning of Aug 2004, when ARKA News Agency
conducted poll among commercial banks, the banks forecasted that by
the end of 2004 the rate of national currency in the country will
stabilize around 530-550 AMD per USD. Besides, Armenian banks did not
exclude that in result of the year, inflation can make 8%. At the
moment, in 11 months of 2004 deflation in Armenia made 0.3%.
According to ARKA News Agency data, 26.94% of profit accrued by
commercial banks of Armenia in Jan-Sep 2004 was provided in account
of net income from foreign exchange operations (1995.3 million AMD on
19 banks). With consideration of Armsvyazbank, net income from
currency operations of banking system made2448.1 million AMD.
Compared to the same period of 2003, income on foreign exchange
operations of 19 banks grew by 816.1 million AMD, or by 69.2%. ($1 –
478 AMD). L.D. –0–

From: Emil Lazarian | Ararat NewsPress