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Armenian Currency Continues Slow Slide In Value

The dram has lost nearly 4 percent of its value in the past three months.
YEREVAN -- The Armenian national currency, the dram, has steadily depreciated in value over the past year despite rising exports and private remittances from abroad, RFE/RL's Armenian Service reports.

It is a development which officials hope will boost domestic manufacturers.

On January 17, the dram was trading at an average of 389 to the dollar, making it 6.2 percent weaker, in nominal terms, against the U.S. currency compared to one year ago.

It has lost 3.7 percent in nominal value in the last three months alone.

The dram dramatically appreciated against the dollar and the euro over several consecutive years of double-digit economic growth, which came to an end in 2008 when the global financial crisis caused a sharp slump.

But the Armenian currency rallied against those hard currencies as the country began recovering from recession in 2010.

In a December 2010 report, the International Monetary Fund warned that the dram was overvalued by 10-12 percent.

President Serzh Sarkisian acknowledged in March that the dram's strengthening in 2010 and before had a negative impact on Armenian manufacturers.

He then predicted its "very slow and stable depreciation" in the coming months. A dollar was worth 368 drams at the time.

The Central Bank of Armenia (CBA) appears to have eased its interventions in the domestic currency market.

The bank sold a total of almost $8 million in hard currency at Yerevan's NASDAQ OMX stock exchange last week. It insists it is only seeking to prevent drastic and short-term exchange rate fluctuations.

"If that has been done to prevent current rate fluctuations then it's an acceptable approach," Bagrat Asatrian, a former CBA governor affiliated with the opposition told RFE/RL on January 17. "Not to mention many other factors that warrant Central Bank intervention."

Asatrian also downplayed the dram's continued decline this month, saying that seasonal factors are also at work. "There is no cause for concern," he told RFE/RL.

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