Andranik Tevanyan: exchange rate surge won't last more than a week

PanARMENIAN.Net - "The current situation in Armenia is the result of monetary, budget, and financial policy of Armenia's Government and the Central Bank," as the head of "Polyteconomia" Research Center, economist Andranik Tevanyan, informed the PanARMENIAN.Net reporters. As he claims since 2007 about $2.5 billion have been aimed at keeping the dram rate in balance and the budget became an end in itself. Now when Armenia has failed to receive financial support in the amount she expected and less than $1billion have been left from the means "talked-up," the problem of bankruptcy has arisen. So the Central Bank had to act as a dilettante, i.e. had to decrease the dram rate, thinks the analyst. Tevanyan also mentioned that considering the experience of developed countries, the fluctuating rate policy should have been implemented in due time and in small corridors, In our case the Central Bank of RA and the Government, pleading the world crisis, announced about the fluctuating dram rate, allowing the market to set up the rate.



When asked how long the dram rate surge will last,Tevanyan answered that according to his calculations- one week at most, then it will balance. What refers to the highest point, the basic factor here is the expectancy factor of the population-it will cut down on consumption in order to save up.



Central Bank's new policy will have a negative effect on the least protected areas of the market, in particular, on a small and average-scale business as well as on the country's population. As Tevanyan informed society is panic-stricken, some stores have been shut down, the work in the Customs is suspended, the prices on imported goods are expected to rise. So, under the current inflation pressure, in order to avoid the situation of the 90's, the RA Government has to take up adequate measures, i.e. to weaken the tax burden according to the proportion of national currency slump. As a result, the budget's revenues, according to Tevanyan, will decrease by 20%, whereas the dram has fallen in much the same amount.



Only yesterday the dollar rate at currency exchange offices was 305-310 drams for one dollar, the euro rate was 387 drams. The basic cause for such a sudden boost of currency rates against the dram was the statement made by the head of the Central Bank, Arthur Javadyan. It said that that the Central Bank had come up with the decision to restrict its interference in the foreign exchange market and to go back to the policy of fluctuating rates. Besides, accordong to Central Bank's calculations, the average dollar rate in 2009 is expected to be between 360-380 drams.
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