Speaking on MIR TV, the Armenian Prime Minister Tigran Sargsyan said Armenia is interested in using the Russian rouble for transactions with CIS countries.
According to Regnum news agency report, Tigran Sargsyan said “a whole package of suggestions” on this subject has been proposed by the Armenian Central bank three years ago. Notably, three years ago Tigran Sargsyan was the head of Armenia’s Central Bank.
Sargsyan underlined, that a project is on the table of the CIS Intergovernmental Bank. According to him, this bank, where are represented all CIS countries’ Central Banks could be an appropriate instrument.
“In case the Central Banks will use these currencies and consider them as own reserve currencies, it will be the first step towards calculations in rubles between CIS countries, and in its turn, it means, that the Central Bank of Armenia will have to recognize ruble as its reserve currency. Hereinafter, our commercial banks can maintaine a ruble accounts in Armenian Central Bank and so on. It is quite a logical scheme, and Armenia is very interested ruble to become a currency, to carry out a transaction not only with Russia but also with CIS other countries. We will make every effort to turn it to reality”, — said Sargsyan.
Interestingly these words come days after the agreement for Russia to provide Armenia with $500 million loan, and also following the report about Gazprom rising gas prices for Armenia from $110 to $154 per thousand cubic meters starting from April 1, 2009. That is: 1) looks like all transactions between Armenia and Russia at this point are done in US dollars; 2) If Russia wanted to push Armenia into using its weakening rouble – this is just the time.
On another note, this might actually prove beneficial – especially using the rouble as reserve currency. I’d rather trust the authoritarian Russian government and it’s rouble – backed by world’s largest oil and gas reserves, than Armenia’s government with it’s pointless struggle to maintain the Armenian dram rate at an illogically high level because a couple of major importer-oligarchs say so.
What’s next – formally become a province of Russia?
The governments since 1998 have slowly but surely been eroding the sovereignty of Armenia up to a point when every two-bit politician in Russia refers to Armenia as their outpost.
I am not surprised that the CBA has thought about this 3 years ago. After their major cock-ups with their reserves (selling the gold into dollars when the gold prices started going up and the dollar started depreciating), the strange policy of strengthening Dram and choking the exports while boosting the imports, and the current manipulation of Dram trying to shore up its strength against other currencies again stifling any chance of exports growth in this global recession.
I don’t know if these people have the mental capacity of babboons or are they simply serving the needs of the bandits in charge of the country.
Babboons are smart–don’t insult them by comparing them to Armenian bureaucrats, Nazarian!
A1plus story is unintentially (or is it intentially) funny:
MINISTER SHARES HIS OPINION ON RUBBLE ZONE
“There are people who wrongly believe that if Russia has given Armenia a loan of 500 million rubbles it means Armenia will join the zone of rubble.
Meanwhile, it’s not only the government sucking up to Russia for the sake of power.
Russia rules the roost in Armenia it seems, and whether you’re in power, and whether you’re not seems linked to that.
At least now you know who’s running Armenia’s police and security forces…
Next will be hoisting the Russian flag.
Onnik I wouldn’t call it sucking up it is simple negotiation with the people who in reality control Armenia for holding a demonstration in Yerevan. Another prove that prove that even a minor decision like that is not made by Yerevan Mayor but by somebody sitting in Moscow.
The only way we can restore our sovereignty is by establishing democracy. As to who comes to power that should be left people to decide. I think this is something for which it s worth to put our differences aside.
The ruble is in freefall against the U.S. dollar and the Russian economy which is overly dependent on the energy sector is in trouble. Not the currency you want to link to.
As to the Dram it appears to be finding its natural equilibrium as discussed in this paper by the IMF:
R is right–the ruble really is “rubble” these days. Another article with lots of charts if you’re feeling wonky:
Saturday, February 7, 2009
Russia’s Finances and Economy Look Nervously Towards The Abyss
“A significant amount, if not all, of the speculative attacks on the ruble are funded by the central bank itself,” said Vladimir Osakovsky, Moscow-based economist for UniCredit
The underlying dynamics of the current ruble devaluation are provoking more than a little consternation in Russia at the moment. In the forefront of the debate are data from Bank Rossii (the central bank) which show they lent 7.7 trillion rubles ($214 billion) in overnight and seven-day loans (secured with bonds or other collateral) in just 16 trading days last month – this was about double the 4.8 trillion rubles provided via so-called repurchase auctions in December. Over the same period the ruble lost 18 percent against the dollar. The question is, is there a connection here?
[…] Armenian Currency Goes PoofDate By: Trace Mayer, J.D.04/Mar/09 Estimated Reading Time: 4 – 6 minutes Hello there! If you are new here, you might want to subscribe to the RSS feed or free email subscription for updates.Powered by WP Greet BoxOn 3 March 2009 in the space of a few hours the Armenian dram evaporated from about 300 per dollar to about 400 per dollar and 275,000 drams per ounce of gold to approximately 365,000 drams per ounce of gold. This rapid 30% currency poofing is like when the Kazakhstan currency went poof but without the strategic geo-political considerations. Nevertheless, extremely ominous financial troubles stir in Eastern Europe. One knows the conditions are dire when Armenian Prime Minister Tigran Sargsyan advocates using the Russian ruble as a stable currency. […]
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