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Armenia lacks of currency reserves to prevent devaluation

22 March 2014 [12:50] - TODAY.AZ
The Armenian government fails to prevent the devaluation of the national currency, dram, which continues since the beginning of 2014.

The devaluation of dram has turned into irreversible process in Armenia, although the country's Central Bank has introduced foreign exchange intervention to prevent devaluation and put $100 million to the market since February 2014.

On March 17, the U.S. dollar exchange rate hit 414.96 drams, increasing by 0.4 drams compared to the previous Friday. On March 18, the U.S. dollar exchange rate rose by 0.25 drams compared to the previous day to 415.21 drams, the bank reported.

Azerbaijani expert and Ph.D in Economy Oqtay Haqverdiyev believes that the devaluation in Armenia is inevitable.

"Armenia will hardly be able to prevent the devaluation," Haqverdiyev told Azernews. "The Central Bank lacks of necessary currency reserves to continue foreign exchange intervention into the local market to prevent the devaluation."

He said Armenia's economy has paralyzed. "The economy is uncontrolled, and regresses every year," Haqverdiyev said. "The owners of the major industries stay abroad, as they are not interested to launch business in the country, which is under blockade due to the Nagorno-Karabakh conflict."

Haqverdiyev added that the Armenian economy heavily depends on the Russian economy.
"The Armenian economy is under the influence of all negative processes which the Russian economy faces," he noted.

Armenia broke out a lengthy war against Azerbaijan laying territorial claims on its South Caucasus neighbor. Since a war in the early 1990s, Armenian armed forces have occupied 20 percent of Azerbaijan's territory, including Nagorno-Karabakh and seven surrounding regions.

Armenia's aggressive policy left the country out of all major regional economic projects, including the Baku-Tbilisi-Ceyhan oil pipeline and the Baku-Tbilisi-Kars railway.

As a response to Yerevan's aggressive policy, Turkey also closed its borders with Armenia, demanding it to withdraw its troops from occupied lands of Azerbaijan. The blockade of the country continues to slowdown economic growth in Armenia.



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