RA CB to continue intervention in foreign exchange markets
"CBA will periodically intervene in foreign exchange rate market, buying up little quantities of US dollars to prevent speculative shocks," the Chairman of Parliamentary Commission for Finance, Crediting, Budget and Economy, Member of RA Republican Party Gagik Minasyan told a news conference on Mar. 12, commenting on dram devaluation and CBA introduction of floating exchange rate policy. According to him, the situation in the foreign exchange rate market has stabilized.
"The return to floating exchange rate policy has long been expected," he noted, citing two reasons for that drastic step. "Armenia's banking system was ready to service their clients and pay interests for all the investments previously made. Besides, inflation rate comprised 5.2% in 2008, and in 2009 it decreased by 0.7%." He added that in 2008 inflation pressure in Armenia was much lower than in other CIS countries, where the minimal inflation rate comprised 10%.
Minasyan stressed that a phased introduction policy would have had a number of disadvantages. "Upon termination of the next step, wide sections of the population and banking systems would start buying out great amounts of foreign currency to secure themselves against losses. As a result, CBA would be forced into selling more foreign currency offering more possibilities for speculators to increase their incomes."
"The return to floating exchange rate policy has long been expected," he noted, citing two reasons for that drastic step. "Armenia's banking system was ready to service their clients and pay interests for all the investments previously made. Besides, inflation rate comprised 5.2% in 2008, and in 2009 it decreased by 0.7%." He added that in 2008 inflation pressure in Armenia was much lower than in other CIS countries, where the minimal inflation rate comprised 10%.
Minasyan stressed that a phased introduction policy would have had a number of disadvantages. "Upon termination of the next step, wide sections of the population and banking systems would start buying out great amounts of foreign currency to secure themselves against losses. As a result, CBA would be forced into selling more foreign currency offering more possibilities for speculators to increase their incomes."
