COMMERZBANK AG AND UBS AG ADVISE RUSSIA, UKRAINE AND KAZAKHSTAN TO MOVE TOWARD A FREE FLOAT LIKE ARMENIA DID
ArmInfo
2009-03-05 23:18:00
ArmInfo. Commerzbank AG and UBS AG advise Russia, Ukraine and
Kazakhstan to abandon their currency management regimes and move
toward a free float like nearby Armenia to protect their economies
against the global credit crisis, reports Bloomberg.
Armenia devalued the dram 22 percent against the dollar during the
past two days as part of a $540 million credit- line agreement with
the International Monetary Fund. The move will help reignite the
"struggling" economy, central bank chief Artus Javadyan said.
Russia undertook what the central bank described as a "gradual
devaluation" of the ruble, spending 36 percent of its foreign-currency
reserves to curtail a 35 percent depreciation versus the dollar since
August. In Ukraine, policy makers have drained 24 percent of reserves
since August to stem a 41 percent drop in the hryvnia with "daily"
interventions, according to the central bank.
"Armenia has done better than all the others by moving straight to a
free float," said Michael Ganske, head of emerging-markets research in
London at Commerzbank, which ranks itself among the 10 biggest traders
of the ruble worldwide. "It gives them the flexibility to adjust to
new economic scenarios. In the current global environment it’s very,
very hard to maintain an overvalued currency."
The artificially strong Armenian dram was hurting economic growth and
boosting unemployment, Nienke Oomes, the IMF’s representative to the
country, said yesterday, according to a central bank statement. "The
best option is for the currency to float freely and for the market
to determine the rate itself."
From: Baghdasarian