YEREVAN—The Chairman of Armenia’s Central Bank Arthur Javadian presented an analysis of the recent rapid devaluation of Armenia’s currency, the dram, during a press conference on Wednesday in Yerevan, and explained the Central Bank’s plan of actions to regulate the situation.
Javadian’s message to a concerned public was optimistic, despite the fact that the dram has depreciated by more than 25 percent in the last two months, evidently due to the Russian ruble’s continuing free fall.
Javadian assured the press that “currently, the dollar is overvalued, while the Armenian dram is too devalued,” chalking the discrepancies up to panic and speculation by investors.
The Central Bank Chairman said the real price of the dram will become apparent when the causes of the dollar’s overvaluation are eliminated.
Javadian said that there is no problem with foreign currency in the banking system and, if necessary, the Central Bank will be able to provide liquidity in the required amount. He added that the Central Bank is keeping the situation under control and has “all the opportunities to restrain inflation.”
Javadian said that after Dec. 26, the Central Bank will exit the currency market, letting the dram rate float freely in the market. Nevertheless, he said, the Central Bank will return to the stock exchange and will continue its transactions within NASDAQ OMX Armenia.
The Prime Minister of Armenia Hovik Abrahamian also issued a statement on the situation in the financial market.
“The current developments in the financial market are actually conditioned by the global and regional developments, which are not free from obviously speculative elements,” Abrahamian said in his statement.
“The Government of Armenia remains loyal to the adopted policy of a floating exchange rate, which is necessary to keep the economy safe from long-term instability,” he added.
The Prime Minister said that the government supports the Central Bank and its efforts to mitigate the effects of the troubled exchange rate market.
He assured in his statement that people with savings in Armenian banks should be confident in the government’s deposit insurance system.