EXPORTERS FEAR FURTHER DRAM UPSURGE
By Shake Avoyan

Radio Liberty, Czech Rep.
Nov 7 2006

A manager of Armenia’s leading diamond exporting company fears a
further appreciation of the national currency may leave producers
oriented for foreign markets counting their losses.

Head of the British-registered Diamond Company of Armenia and President
of the International Association of Armenian Jewelers Gagik Abrahamian
told the media at the Hayeli (Mirror) club on Tuesday that if the
situation continues it may cause many exporting businesses to wind
up their operations altogether.

Abrahamian, who is brother of influential President of the Union
of Armenians of Russia Ara Abrahamian, said exporting companies in
Armenia do not yet work at a loss, but he said their profits have
considerably reduced.

"I suggest temporarily fixing the dram’s exchange rate to the dollar
or the euro to curb its further appreciation. It should be fixed
for a certain period of time allowing for a certain percentage of
fluctuation of course," Abrahamian said, describing the exchange rate
of some 400 drams per U.S. dollar as quite acceptable.

On the whole agreeing with Abrahamian, the owner of the Mika Limited
Company, wealthy businessman Mikael Baghdasarov thinks, however, that
the appreciation of the Armenian currency will have a long-term benefit
for the economy, although he said as a cement producer he has suffered
losses. "The timing for the strengthening of the dram has been chosen
correctly, because all world prices are high, they have never been so
higher before and are likely to start to fall in the near future. If
international prices go down and the dram in Armenia gains in value,
the losses will be greater, as now prices abroad compensate the losses
incurred because of the exchange rate," he explained.

Baghdasarov, a fuel tycoon believed to have super profits from the
favorable situation with the dram/dollar exchange rate, says nothing
should be changed in the Central Bank policy. "Only the dollar fall
should be made slower," he said.

The Armenian dram has gained more than 40 percent in value against
the U.S. dollar since December 2003 and its appreciation is hurting
domestic manufacturers and many people dependent on cash remittances
from their relatives working abroad.

The authorities strongly deny any exchange rate manipulation. The
Central Bank ascribes the upsurge primarily to recent years’ increase
in hard currency wired home by hundreds of thousands of Armenians
living and working abroad. Another explanation is the recently observed
construction boom in the country that attracts millions of dollars
from abroad invested in property.

Last month Suren Bekirski, director of the export-oriented textile
company Tosp, told RFE/RL that as an exporter their company loses
twice as much as it gains marketing its products locally.

"If things go on like this, we will last for only a few more months,"
he said.