The Central Bank of Armenia (CBA) pledged to prevent a further sizable depreciation of the Armenian dram on Tuesday after stepping up its interventions in the local currency market.
“In our view, [exchange rate] fluctuations will now be negligible,” said the CBA governor, Artur Javadian. “We expect that sharp fluctuations will quickly end because the exchange rate will stabilize as a result of these actions,” he told a news conference.
The CBA announced on Monday that it will sell fixed amounts of U.S. dollars to Armenian commercial banks and publicize information about those transactions on a daily basis. The move followed Prime Minister Hovik Abrahamian’s calls for tough CBA action against “speculative” currency trading which he blamed on the dram’s weakening in recent weeks.
According to Javadian, the CBA’s daily currency sales will amount to $6 million in the course of this week. He said they will be gradually lowered in the following weeks.
The Armenian currency continued losing ground even after Abrahamian’s Friday appeal, trading at 457 drams per dollar on Tuesday, down by about 10 percent since the beginning of November. Some commercial banks have reportedly limited their dollar sales to customers over the past month.
Like other Armenian officials, Javadian blamed the dram’s weakening on Russia’s worsening economic woes resulting in large measure from the collapse of international oil prices. He said that a sharp depreciation of the Russian ruble has triggered panic buying of dollars in Armenia and other ex-Soviet states.
The CBA chief said that illicit currency speculations in Armenia has been another factor. He said that the Central Bank has launched “proceedings” against some commercial banks and currency retailers that will likely result in “very strict” punishments. In particular, he said, several currency exchange shops will be fined up to 4 million drams each.