REAL VALUE OF ARMENIAN DRAM IS BALANCED, CHIRMAN OF BASEL COMMITTEE SAYS

Noyan Tapan
Nov 13, 2007

YEREVAN, NOVEMBER 13, NOYAN TAPAN. The real value of the Armenian dram,
as compared with other foreign currencies, has come back to the level
of the 1990s. The President of the Netherlands Bank and the Chairman
of the Basel Committee Dr. Nout Wellink said at the November 13 press
conference that by calculations of the International Monetary Fund,
the real value of the Armenian dram is balanced.

According to him, the exchange rate of the euro against the US dollar
has hit an unprecedented high, even though the real and weighted
exchange rates of the euro are much lower. N. Wellink said that the
annual export and import indices of EU countries are equal and make
1.4 trillion euros. "We – in Europe, especially in the Netherlands
are not afraid of appreciation because it has both positive and
negtaive aspects," he said, adding that in order to mitigate the
negative consequences of the appreciation, it is necessary to conduct
a correct macroeconomic policy and a flexible export policy. In his
words. the impact of the international rise in prices of imported
fuel would have been greater if the euro had not appreciated.

The Chairman of the Central Bank of Armenia (CBA) Tigran Sargsian
in his turn said that the rise in international fuel and food prices
has created inflation expectations, which existed throughout 2007 in
Armenia as well.

With the aim of neutralizing the impact of the rise in international
prices and these expectations, the CBA raises the refinancing interest
rates stage by stage.

In the opinion of N. Wellink, the pressure of the rise in international
prices of power-bearing substances is greater in Armenia than in
other countries. As a possible consequence of this, he indicated an
increase of salaries and prices of other goods. According to him,
a restraining monetary and credit policy in Armenia may help return
the inflation expectations and inflation to their normal level.