ARMENIA LETS DRAM FLOAT, GETS CLOSER IMF LOAN

The Associated Press
March 3, 2009

YEREVAN: Armenia’s Central Bank on Tuesday said it will give up its
defense for the dram, the national currency, and the IMF said it was
ready to offer Armenia a $540 million loan.

The Armenian Central Bank decided to limit currency interventions
and return to free float policy "due to the financial and economic
crisis, worsening terms of trade and slowing capital inflows", the
bank’s chairman Artur Dzhavadyan told reporters.

The country’s banking authorities said they expect the dram to cost
360 to 380 drams per $1. The dram cost 306 against the dollar before
the free float policy was announced Tuesday.

Several hours after the bank announced the move, IMF Managing Director
Dominique Strauss-Kahn recommended its executive board to approve
the country’s request for a $540 million loan.

He said in a statement that to qualify for the loan Armenia had to
let its currency go. This would allow "the exchange rate to move in
line with market fundamentals, so as to cushion the economy from
the external shocks and safeguard foreign exchange reserves", the
statement said.

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to use reserves to help exportersThe IMF will discuss the allocation
of the loan on Friday. Armenia will be able to draw about $239 million
immediately if the request receives approval.