USD EXCHANGE RATE FALLS LOWER AMD 400

ARKA News Agency, Armenia
Aug. 8, 2006

YEREVAN, August 8. /ARKA/. The USD exchange rate on Armenia’s
foreign-exchange market has fallen lower than AMD 400/$1 thereby
passing one more psychological minimum. Some Armenian banks and
exchange offices have set the following exchange rates: AMD 393-397/$1
(purchase) and AMD 397-405/$1 (sale).

This caused stock-jobbing on the country’s foreign-exchange market.

Most exchange offices are closed for lack of sufficient cash as well
as because of uncertainty. Long queues have formed in front of working
exchange offices.

The CBA-set USD average exchange rate is AMD 406/$1 CBA experts
believe that the US dollar will continue its fall even down to AMD
350/$1 before the end of next week if the CBA does not interfere and
start buying up dollars.

Other experts and dealers believe that the USD would be falling at
a higher rate but for the auctions on the Armenian Stock Exchange,
which at least allows the developments on the foreign-exchange market
to be followed and possible exchange rate on the following day to be
forecast. All funds deposited with the stock exchange by banks have
run out.

According to experts, the main factor of the USD behavior is huge
USD flows into the country. The matter concerns not only transfers
for individuals, but also funds of enterprises.

Also, to maintain the foreign-exchange position, banks are selling
US dollars on a large scale.

Experts consider the fall in the EUR exchange rate normal, connecting
it with the AMD revaluation against the USD and with international
trends in the EUR/USD ratio.

9.79% USD depreciation against the AMD has been recorded in Armenia
since the beginning of 2006, with 2.41% EUR depreciation.

It is noteworthy that the current exchange rate is almost equal to
that 11 years ago: in 2005 the USD/AMD exchange rate was $1/AMD 406 at
the beginning of the year down to $1/AMD 402 at the end of the year,
while in 1995 it was $1/AMD 405.88.

During 13-tear history of the Armenian national currency, the highest
MD exchange rate was recorded in March 2003 – AMD 591.76/$1 at the
CBA-set nominal exchange rate. Since them, the Armenian dram has
actually revaluated by 45.76%, whereas the USD has devaluated against
the AMD by 31.39% or by AMD 185.83.