Standard Bank analyst talks Georgian, Armenian currencies dropDecember 8, 2014 - 15:57 AMT PanARMENIAN.Net - Georgia's currency has collapsed to its lowest level versus the dollar in more than a decade and the Armenian dram to its lowest since 2006 as the Russian rouble quake sends tremors across the former Soviet Union, Financial Times said. Russia's neighbours are closely tied to their former master's economy through trade ties and remittances. When the rouble plunges it piles pressure onto their currencies. Kazakhstan was forced to devalue the tenge earlier this year when the rouble first began to slump, but now the heat is on Armenia and especially Georgia. Timothy Ash of Standard Bank wrote: “Armenia and Georgia have similar macro stories, small economies, with managed float FX regimes. Both have relatively strong/robust public finance profiles, i.e. low budget deficits/public debt ratios, and have been growing at decent rates, of 3-4%. However, their weaknesses are both on the external financing side, i.e. persistent current account deficits, and limited FX reserve cover. Russia is an important trading partner for both, as they have both benefitted from worker remittances, which are likely stalling now with weak growth in Russia, and lower oil prices. Exports to Russia have also been quite significant for both - Georgia has tried to refocus on Russian markets as relations warmed a bit following the departure of President Saakashvilli. Russian tourism has been a new "boon" for Georgia in recent years - a rediscovery for many Russians from the Soviet era. These are obviously lagging now. Both also have significant agro exports to Russia, and had hoped to benefit from Russian sanctions on the West - but massive Russian devaluation is clearly threatening this trade. So these managed currency weakenings are only to be expected - inflation is low single digits, so inflation pass thru should be relatively limited.” Related links: Top stories Yerevan has dismissed Turkey’s demand to shut down the Armenian nuclear power plant as “inappropriate”. Armenia will loan 2.9 billion drams to Nagorno Karabakh (Artsakh), according to a draft government decision. The Ministry of Ecology and Natural Resources of Azerbaijan has “strongly condemned” Armenia’s decision. Kerobyan has said that for the first time in the history of Armenia, the volume of foreign direct investments amounted to about $1 billion. Partner news | European Parliament to discuss repression in Azerbaijan The European Parliament will discuss repression of civil society in Azerbaijan on April 24 PACE wants concessions from Azerbaijan to accept Baku back A PACE co-rapporteur said that Azerbaijani authorities must make certain concessions so that the country can return to PACE. Cyprus parliament honors Armenian genocide victims Acting House President Zacharias Koulias noted that April 24 marks the “black anniversary” of the Armenian genocide. Armenia PM, France envoy discuss regional matters Issues related to the consistent development of Armenia-France cooperation were discussed. |