CB: rapid transition from fixed exchange rate to floating more effectiveMarch 4, 2009 - 20:09 AMT PanARMENIAN.Net - The RA Central Bank has made a decision to limit its intervention in the foreign exchange market and return to the policy of the floating rate in order to eliminate the dram devaluation expectations, said Vache Gabrielyan , the Deputy Chairman of RA Central Bank at the press conference.He emphasized that the gradual transition from the fixed rate to the floating rate would have been "less effective and cost more. Such is Russia's experience where despite huge expenditures, the inflation expectations do not change. The experince of countries like Georgia, Kazakhstan, Russia, Belarus where this transition was taking place gradually proves that devaluation and inflation expectations are not eliminated. Whereas in countries where such transitions take place more abruptly, the currency devaluation expectations are eliminated considerably faster," he added. "Overall, said Gabrielyan, the Central Bank, in fact, has not changed its policy in long-term period and from the point of view of macroeconomics has never made any claims about the transition to the fixed rate. A considerable pressure on the currency rate of Armenia became obvious still in autumn when the country could not import sufficient goods because of the military actions in the neighbouring Georgia. If the Central Bank had allowed sharp fluctuations of the currency rate, it would have caused considerable problems from the point of view of financial stability, so rate was temporarily fixed. The return to the policy of floating rate in Armenia was necessary to immediately eliminate the national currency devaluation expectations", said Gabrielyan adding that the stability and liquidity of the bank system based on February monitoring results also contributed to it. The day before, only within several hours, the dollar rate in Armenia rose dramatically to 360dram per $1, the euro rate reached 440drams. The dollar rate at exchange offices had been 305-310 per $1, the euro rate-387 accordingly. The basic reason for such sudden surge of foreign currencies against the dollar was the statement made by the head of RA Central Bank, Arthur Javadyan, according to which the Central Bank of Armenia has made a decision to limit its interference in the foreign exchange market and to go back to the policy of the floating exchange rate. Top stories Yerevan has dismissed Turkey’s demand to shut down the Armenian nuclear power plant as “inappropriate”. Armenia will loan 2.9 billion drams to Nagorno Karabakh (Artsakh), according to a draft government decision. The Ministry of Ecology and Natural Resources of Azerbaijan has “strongly condemned” Armenia’s decision. Kerobyan has said that for the first time in the history of Armenia, the volume of foreign direct investments amounted to about $1 billion. Partner news | Viva-MTS: Tech solutions to modernize infrastructure of border village The border village has been the focus of Viva-MTS and the Foundation for the Preservation of Wildlife and Cultural Values since 2015. Ucom's fixed network launched in Artashat To mark this occasion, the company has introduced a special offer exclusively for Artashat residents. “By Your Side”: IDBank's new support program for displaced Artsakh citizens IDBank is launching a long-term social support program for forcibly displaced Artsakh residents. The Power of One Dram to benefit Road of Life charity The companies inform that the May beneficiary of The Power of One Dram is the “Road of Life” charitable organization. |