WORLD BANK PRAISES ARMENIA DRAM DEVALUATION
Agence France Presse
March 4, 2009 Wednesday 1:38 PM GMT
The World Bank praised Armenia Wednesday for allowing its currency to
devalue but also warned against allowing the move to stoke inflation
in the ex-Soviet republic.
The dram lost 20 percent in value against the US dollar at exchange
offices Tuesday after the Central Bank announced that it had decided
to limit its interventions on the foreign currency market, returning
to a free-float policy.
"Greater flexibility of the exchange rate will help Armenian companies
to compete more successfully in global and domestic markets and will
pave the way for high and sustained growth," the World Bank’s director
in Armenia, Aristomene Varoudakis, told reporters.
He said that the central bank had spent 500 million dollars (400
million euros), a third of its foreign currency reserves, on propping
up the dram since October.
But Varoudakis also called on Armenia to ensure strict controls on
prices for basic goods.
"Economic competition bodies must monitor strictly to ensure there
is not a sharp and unreasonable increase in prices," he said.
After rising from 305 drams to the dollar to more than 400 drams by
late Tuesday, the dram’s rate fell to 360-370 drams to the dollar at
exchange offices Wednesday. The central bank’s official rate Wednesday
was 372 dram to the dollar.
Armenia has been hard hit by the global economic downturn, with
thousands of people losing their jobs in the small Caucasus mountains
country, according to local media.