Abrupt introduction of floating exchange rate policy is more profitable
"Dram devaluation process is an objective step in CBA and RA Government policy," Vice Minister of Finance Vardan Aramyan told a news conference on Friday. According to him, the preconditions for dram devaluation had been registered since September 2008. Recession in trade, transfer flow decrease and CBA internal reserves resulted in floating exchange rate policy introduction.
Previous experience of many countries practicing floating exchange rate policy, including Russia, had been examined. As the financial system of Armenia proved to be the most stable in the region, drastic implementation of floating exchange rate policy was applied here, which is more profitable in the long run.
"Dram devaluation resulted in price increase for imported goods. In current circumstances CBA and the Armenian Government had to chose between financial stability or price stability in the country," Aramyan said.
Referring to the issue of possible introduction of fixed AMD exchange rate by CBA, (AMD360 - 380 against $1), Aramyan explained that CBA never announced a restraining policy for AMD.
"The forecast was made to prevent the holding effect and minimize negative expectations."
According to Aramyan, the AMD exchange rate has already been stabilized. If purchase and sale margin amounted to AMD20 on Mar. 5, the current margin has decreased to AMD 4-5.
Previous experience of many countries practicing floating exchange rate policy, including Russia, had been examined. As the financial system of Armenia proved to be the most stable in the region, drastic implementation of floating exchange rate policy was applied here, which is more profitable in the long run.
"Dram devaluation resulted in price increase for imported goods. In current circumstances CBA and the Armenian Government had to chose between financial stability or price stability in the country," Aramyan said.
Referring to the issue of possible introduction of fixed AMD exchange rate by CBA, (AMD360 - 380 against $1), Aramyan explained that CBA never announced a restraining policy for AMD.
"The forecast was made to prevent the holding effect and minimize negative expectations."
According to Aramyan, the AMD exchange rate has already been stabilized. If purchase and sale margin amounted to AMD20 on Mar. 5, the current margin has decreased to AMD 4-5.
