STRENGTHENING OF DOLLAR IN ARMENIA DURING LAST TWO MONTHS RELATES TO ACTIVITY OF ECONOMIC ENTITIES

ARKA
Sep 3, 2009

YEREVAN, September 3. /ARKA/. Dollar appreciation in Armenia is due
to the increase in economic activity of economic entities the past
two months.

This opinion was expressed to ARKA by the main dealer of Cascade Bank
Arsen Sargsyan.

"The supply exceeded the demand for the dollar, and as a result of
this the dollar in the country gradually rose to the level that we
have now," he said.

Sargsyan considers that it is not necessary to perceive an increase
in the rate of 3% as painful.

To the question whether the dollar will go beyond the planned corridor
of the Central Bank of Armenia of 360-380 drams per $ 1, Sargsyan
said that it depends on how the stabilizing factors will work.

In his opinion, the economic activity in Armenia in September will
increase, in regards with the Armenian exporters, particularly in
the mining sector.

The cash flow is going to increase, resulting in an increase in
selling currency by these companies.

At last, according to Sargsyan, this may help to stabilize the
exchange market.

The second stabilizing factor is the possibility of the Central Bank
of Armenia to use such tools as direct intervention.

"This is a subjective opinion, since it is difficult to suggest what
steps the Central Bank would make", he said, having foreseen that
the dollar will remain in that corridor CB.

According to ARKA News Agency, the average market exchange rate of
the Armenian dram to the dollar, which was formed in the foreign
exchange market amounted to 376.03 drams for $ 1 on September 1 2009,
down to the first of July of this year by 16.05 points (as of July
1 the rate was 359.98 drams per $ 1, on August 3 is was 370.53 drams).

After March 3rd, 2009 Armenia’s Central Bank announced a return to
a floating exchange rate policy.

The market average rate of drama to the U.S. dollar fell to 66.36
points compared to March 2nd and amounted to 372.11 drams for $ 1.

According to specialists of the CBA, the weighted average rate in
2009 will fluctuate in the corridor 360 – 380 drams for $ 1. ($ 1 –
376.06 dram).