AGHAJANOV: ARMENIAN AUTHORITIES CONDUCT POLICY OF ARTIFICIALLY HIGH EXCHANGE RATE OF DRAM

Noyan Tapan News Agency
Oct 9 2006

YEREVAN, OCTOBER 9, NOYAN TAPAN. The Armenian authorities are
conducting the policy of artificially raising the exchange rate of
the Armenian dram. Economist Eduard Aghajanov made this statement
during a press conference on October 9. According to him, as a
result of this policy, the absolute amounts of industrial production
and exports declined, while imports grew substantially. Thus, in
January-August 2006, for the first time in recent years, Armenia’s
imports exceeded 2.2fold its exports. In the opinion of E. Aghajanov,
this is quite a dangerous tendency which shows that national producers
of Armenia are being forced out not only of foreign but also domestic
markets. However, as the economist noted, the country’s authorities
are not concerned about the current sitiation and continue conducting
the policy of an artificially high exchange rate of the dram.

"Over the past three years, Armenia’s imports have considerably
exceeded its exports. The paradox is that last year the deficit of
the foreign trade grew by 38% compared with 2003, while the dram’s
exchange rate grew by 26% over the same period," E. Aghajanov said.

He reminded that according to explanations of the Central Bank of
Armenia (CBA), the depreciation of the dollar is caused by substantial
amounts of dollar transfers to Armenia. However, official statistics
show that the deficit of the payment balance made 193.3 million USD
last year. "That is, in 2005 an outflow of about 200 million USD
rather than inflow of dollars was registered in Armenia, which means
that the exchange rate of the national currency should have declined
instead of the opposite," E. Aghajanov noted.