HSBC BANK ARMENIA CEO: REFINANCING RATE MAY START RISING BY END OF 2009, BEGINNING OF 2010
/ARKA/
September 16, 2009
YEREVAN
YEREVAN, September 16. /ARKA/. Refinancing rate may start rising in
Armenia by the end of this year or in the beginning of the next year,
Chief Executive Officer of HSBC Bank Armenia Tim Slater said.
On September 8 the Central Bank of Armenia (CBA) decided to reduce
the refinancing rate by 0.25pct down to 5% p.a.
It was the seventh reduction in the refinancing rate this year after
March 3 when the CBA returned to a free float for the exchange rate
and raised the refinancing rate by 1pct to 7.75% p.a.
Slater considered CBA’s policy on reducing the refinancing rate
positive and said that it is dictated by potential inflationary
pressures along with possible reduction in interest rates on foreign
exchange and on USD in particular.
If dram rates remain at today’s level and dollar rates go down, some
deposit holders will convert their savings into drams, Slater said.
Slater supported CBA’s repo rate reduction policy as inflation control
is CBA’s main function.
According to Slater, while reducing the rate the Central Bank is
promoting the economy under the conditions of the deflation recorded
over the last month.
Yet, as main part of deposits is in dollars and the dollarization
level has considerably advanced in the country, reduced repo interest
rate has no direct and serious impact20over the economy, Slater said.
In these conditions reducing the reserve norm that is now at 12%
could be a solution as it will help reduce rates on currency deposits
and facilitate conversion of dollar deposits into drams, Slater said.
HSBC Bank Armenia closed joint stock company, daughter bank of HSBC
Bank plc, was registered on September 25 1995. HSBC Bank plc holds 70%
of the shares of HSBC Bank Armenia with the remaining 30% belonging
to foreign Armenian investors. The bank became member of NASDAQ OMX
Armenia at the end of January 2009.