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Armenia’s national currency, the Armenian Dram lost about 10 percent of its value overnight.
$1 US was trading to 550 AMD today, even as banks and exchange offices were reluctant to sell dollars. Consider the fact, that the exchange rate was 415 AMD per $1 dollar exactly 1 month ago. Overall, the Armenian national currency has lost 34% of its value versus the US dollar over the course of 1 month. The exchange rate has been at this point about 10 years ago, in 2005.
RFE/RL’s Armenian service reports that some major food retailers and technology shops were reluctant to sell stuff, as they were not sure what the valuation for their mostly imported goods should be.
I asked my Facebook friends to give some explanations for this downfall. Here are some of their comments:
Alex Nazzivan Ռուսաստանին մոտ ապագայում հետաքրքիր տնտեսական պայմաններ են սպասվում: Հայաստանը, շատ մոտ լինելով Ռուսական տնտեսությանը, հնարավոր է, որ նույնպես հետաքրքիր ժամանակներ սկսի ապրել: Մարդիկ փորձում են այդ ռիսկը նվազեցնել ու իրենց Դրամային ակտիվները փոխել ավելի կայուն ԱՄՆ Դոլարի:
Any price change is related to demand and supply. In case of Armenia both were influenced. Demand for USD was fuelled by the crash in the Russian market, people in Armenian panicked and started buying dollar, the joining to ԵՏՄ cause more panic.
On Supply side CB didnt supply market with USD, the banks are also reluctant to sell their USD. In short there is No USD, there is demand for USD. So whaterver is around there is very demanded.
In my opinion there is not much USD and EUR left in Armenia, all is taken to Russia, and I wouldnt be surprised if CB has no reserves.
within next 6 month there will be a huge crash in Russian market. and this will cause big problems in Armenia because most of the big companies are sold to Russians, and freeze/hold on of remittances
However I see two important possible benefits. a) ԵՏՄ to crash, b) net migration may become positive. Also other possible good things, political change, Russian companies go bankrupt these business nationalised ( depends on political change).
Also consider this interview by the former head of Armenia’s Central Bank Bagrat Asatrian
UPDATE: Here’s also the former PM Hrant Bagratian’s take on this: