Thursday, December 18 2014

On Dec 18 Armenia's Central Bank
tried to sell $4mln on the inter-bank forex market but none of the banks bought
it. No forex transactions were registered on the exchange on the same day, with
the average offer rate being 548.8 AMD/1 USD. It was the first CB intervention
since Dec 8.

 

Dec 8-17 the CB sold $42mln: $6mln a day Dec 8-12 and
$4mln a day Dec 15-17. The average rate during the period grew from 456.63
AMD/1 USD to 570.58 AMD/1 USD, while the cut-off price grew from 455 AMD/1 USD
to 567.65 AMD/1 USD.

 

On Dec 18 on the retail forext market AMD/USD exchange
rate dropped from 570 AMD/1 USD to 485 AMD/1 USD, AMD/EUR rate from 712AMD/1
EUR to 586 AMD/1 EUR, AMD/RUR rate from 8.6 AMD/1 RUR to 8 AMD/1 RUR.

 

Market players say that the key reason AMD is so
volatile is speculations on the market. When the rate was growing people rushed
to buy USD and EUR but now that the rate has started to drop, they have rushed
to sell what they have bought so as not to lose money if the rate continues to
fall. In the meantime, some exchange offices accept only limited sums, while
some bank branches accept currency only upon application approved by their head
offices.

 

On Dec 17 Chairman of the CB Artur Javadyan said that
AMD has undergone hyperdevaluation caused by panic and speculations. He said
that Armenia's banking system has no lack of foreign exchange and can inject
liquidity if need be.  "We are
controlling the situation and are able to curb inflation. Our key goal is to
ensure stable prices," Javadyan said.

 

According to the CBA's statement dated 8 December
2014, on 8 December, the Central Bank of Armenia launched daily interventions
to restore the balance in the exchange market and the soften currency
fluctuations.  The interventions will
last till the end of 2014. The CBA will continue announcing the ceiling of
daily sale amounts till the end of the year to normalize the situation in the
exchange market of Armenia. According to the source, the CB will be publishing
foreign exchange operations to ensure transparency in the financial market of
Armenia.  The daily intervention amounts
will be reduced gradually until the national currency exchange rate is
balanced. In particular, during the first week (8- 12 December) the daily
interventions will be $6 mln.  Afterwards,
the daily interventions will gradually be reduced depending on demand and will
be brought to zero by the end of the year.

 

From Oct till Dec 17 AMD dropped against USD by almost
45%. On Dec 18 it rose by 18%. As a result, on Dec 18 AMD/USD buying/selling
rates made up 460/510 AMD/1 USD, AMD/EUR rates 528/643 AMD/1 EUR, AMD/RUR rates
6.8/9.0 AMD/1 RUR.

 

On Dec 18 in banks the maximum buying rates and the
minimum selling rates coincided: 510 AMD for 1 USD, 620 AMD for 1 EUR, 8.3 AMD
for 1 RUR. NASDAQ OMX Armenia registered no forex transactions, with the total
amount of forex transactions carried out from June till Dec 17 being $396.7mln.