CENTRAL BANK OF ARMENIA RELEASES DRAM’S RATE

Interfax
March 3 2009
Russia

The Central Bank of Armenia is now limiting its interventions on the
domestic currency market and returning to a floating rate for the
dram, Central Bank Chairman Artur Dzhavadian said at apres conference
on Tuesday.

According to the Central Bank’s forecasts, the average rate of the
U.S. dollar throughout 2009 will increase to 360-380 dram/$1 against
307 dram, he said. Dzhavadian added that this would allow for an
optimal rate that substantially raises Armenia’s competitiveness on
the world market.

The International Monetary Fund (IMF) believes that the real rate
of the dollar to the dram in 2009 will increase faster than the
Central Bank’s forecast. The IMF’s representative in Armenia, Nienke
Oomes, expressed this opinion at a press conference in Yerevan while
commenting on the Central Bank’s decision to return to a floating
rate for the national currency.

Oomes added that the dram was currently overvalued and that its rate
had been strengthened more than necessary. She added that the Central
Bank’s forecast regarding the limit of the dram’s decline was too
optimistic for 2009.

She also said that the IMF had made a recommendation to the Central
Bank to restrain the dram if it falls too far. If this happens,
the Central Bank will use a portion of funds from an upcoming $540
million IMF loan, which would be put into replenishing the bank’s
currency reserves.

Oomes said that the floating rate would allow Armenia to step up
exports and maintain its economy while also creating new jobs.

She said that the IMF was very satisfied with the Central Bank’s
decision.

The Central Bank of Armenia has for a long time restrained the rate of
the dram vis-a-vis the U.S. dollar through currency interventions. As
a result, the dollar has held at 305-307 dram throughout 2008 and
the start of 2009.

According to an Interfax correspondent, the rate of the dollar rose
on Tuesday to 340-390 dram/$1 and was continuing to rise.