I went to the bank yesterday to receive a transfer from the US and when I walked in, I was shocked to read the exchange rate as being 464 drams to $1.
All I could think of was that the $2,000 a month that once covered my living and business/project expenses was no longer worth $2,000, but now only worth $1,600. And with the price of food, gasoline and services on the rise, the $1,600 is worth probably half that.
I went to the bank and told Elada, the bank manager that if someone ever wants to have a heart attack, all they have to do is enter the bank and look at the exchange rate.
She agreed that it was very bad and herself didn’t understand why it was so low?
She said that what is really bad is that there are many people who for the last year have kept $100 for their New Years celebration so they could have a nice meal and now what they were expecting to be 56,000 drams, will now only be 46,000 drams. That is a huge amount of money for anyone these days, even me.
Anyway, the following is an article that maybe can explain why there was a sudden rise in the value of the dram?
If you ask me, it sounds to me like it’s just some people at the top with the controls in their hands who found another way of squeezing a few more drops of blood out of the common people who live here that are just barley getting by. If I am right, these people responsible need to be found and terminated, as this not just an act of theft, but again is another act of white genocide, the thing that we must not tolerate for any reason.
ON DEC 1-9 NOMINAL EXCHANGE RATE OF ARMENIAN DRAM STRENGTHENED IN RESPECT TO ALL FOREIGN CURRENCIES
YEREVAN, December 9. /ARKA/. On Dec 1-9 nominal exchange rate of Armenian dram strengthened in respect to all foreign currencies, quotes on which are set by CBA. According to analysis of ARKA News Agency, Canadian dollar lost its positions compared to Armenian dram, its rate decreased by 6.27% in Dec 1-9 (395.53 AMD). Australian dollar goes next - by 5.82%, to 366.1 AMD, Argentinean peso – by 5.21% to 161.08 AMD.
Currencies, most important to participants of financial market of Armenia, i.e. USD and Euro, weakened their positions during such a short period of time. Thus, exchange nominal rate of AMD to USD made 478 per $1, i.e. by 22.05 AMD or 4.41% more than on Dec 1, 2004. Note a year earlier, on Dec 9, 2003 $1 was equal to 566.53 AMD. Exchange rate of AMD to Euro since the beginning of the month strengthened by 4.37% or by 29.08 AMD and today it costs 635.74 AMD. A year ago 1 Euro cost 692.19 AMD.
The fact of strengthening of Armenian dram to Russian ruble is also interesting. Since the beginning of December ruble in Armenia weakened by 3.77%, to 17.09 AMD per ruble, while as of Dec 9, 2004, 1 ruble cost 19.17 AMD.
Analysis of foreign exchange market sale-purchase rates by the banks gives more surprising picture: pretty serious margin between purchase rate and sale rate of foreign exchange. Today it achieves 25 AMD during trade of USD and sometimes even more in trade with Euros. Such a serious margin usually took place in the country in more serious variation of rates in conditions of not created foreign exchange markets in the beginning of transition period. In `normal' conditions, namely in the beginning of 2004, margin in trade with USD ranged between 2-7 AMD. On request of ARKA to explain the reason to such a big difference between sale and purchase rates, the dealers of some commercial banks said that they go for this because average rate really makes 460 AMD per $1, at the exchange rate of CBA in 478 AMD. That is why the banks had to increase the margin to minimize currency risks and receive income from foreign exchange operations in account of rate difference. Otherwise the banks would have losses.
Thus, most of the dealers, though do not exclude future strengthening of AMD in the beginning of the next year, do not give the forecasts in short-term perspective. No one of them gives any comments, explaining it that existing situation `does not have any logics, and it is outside of all economic laws'. Everything depends on what will take place at international financial markets, what moods and trends will be created there, what inflation and what macroindicators will be created in USA and European countries. It is also noted that not the last role in rate trends was played by not so much by exporters, but large investments in Armenia. Nevertheless, part of the dealers expressed opinion that fast decrease of USD rate in last days and in the future more than likely won't take place. At this, dealers note serious volumes of sale-purchase deals at foreign exchange market of Armenia. Along with that on the threshold of holidays Armenia continues receive large private transfers and mostly in USD. At this, received assets immediately turn to drams for making purchases.
Note that in the beginning of Aug 2004, when ARKA News Agency conducted poll among commercial banks, the banks forecasted that by the end of 2004 the rate of national currency in the country will stabilize around 530-550 AMD per USD. Besides, Armenian banks did not exclude that in result of the year, inflation can make 8%. At the moment, in 11 months of 2004 deflation in Armenia made 0.3%.
According to ARKA News Agency data, 26.94% of profit accrued by commercial banks of Armenia in Jan-Sep 2004 was provided in account of net income from foreign exchange operations (1995.3 million AMD on 19 banks). With consideration of Armsvyazbank, net income from currency operations of banking system made 2448.1 million AMD. Compared to the same period of 2003, income on foreign exchange operations of 19 banks grew by 816.1 million AMD, or by 69.2%. ($1 - 478 AMD).
L.D.
All I could think of was that the $2,000 a month that once covered my living and business/project expenses was no longer worth $2,000, but now only worth $1,600. And with the price of food, gasoline and services on the rise, the $1,600 is worth probably half that.
I went to the bank and told Elada, the bank manager that if someone ever wants to have a heart attack, all they have to do is enter the bank and look at the exchange rate.
She agreed that it was very bad and herself didn’t understand why it was so low?
She said that what is really bad is that there are many people who for the last year have kept $100 for their New Years celebration so they could have a nice meal and now what they were expecting to be 56,000 drams, will now only be 46,000 drams. That is a huge amount of money for anyone these days, even me.
Anyway, the following is an article that maybe can explain why there was a sudden rise in the value of the dram?
If you ask me, it sounds to me like it’s just some people at the top with the controls in their hands who found another way of squeezing a few more drops of blood out of the common people who live here that are just barley getting by. If I am right, these people responsible need to be found and terminated, as this not just an act of theft, but again is another act of white genocide, the thing that we must not tolerate for any reason.
ON DEC 1-9 NOMINAL EXCHANGE RATE OF ARMENIAN DRAM STRENGTHENED IN RESPECT TO ALL FOREIGN CURRENCIES
YEREVAN, December 9. /ARKA/. On Dec 1-9 nominal exchange rate of Armenian dram strengthened in respect to all foreign currencies, quotes on which are set by CBA. According to analysis of ARKA News Agency, Canadian dollar lost its positions compared to Armenian dram, its rate decreased by 6.27% in Dec 1-9 (395.53 AMD). Australian dollar goes next - by 5.82%, to 366.1 AMD, Argentinean peso – by 5.21% to 161.08 AMD.
Currencies, most important to participants of financial market of Armenia, i.e. USD and Euro, weakened their positions during such a short period of time. Thus, exchange nominal rate of AMD to USD made 478 per $1, i.e. by 22.05 AMD or 4.41% more than on Dec 1, 2004. Note a year earlier, on Dec 9, 2003 $1 was equal to 566.53 AMD. Exchange rate of AMD to Euro since the beginning of the month strengthened by 4.37% or by 29.08 AMD and today it costs 635.74 AMD. A year ago 1 Euro cost 692.19 AMD.
The fact of strengthening of Armenian dram to Russian ruble is also interesting. Since the beginning of December ruble in Armenia weakened by 3.77%, to 17.09 AMD per ruble, while as of Dec 9, 2004, 1 ruble cost 19.17 AMD.
Analysis of foreign exchange market sale-purchase rates by the banks gives more surprising picture: pretty serious margin between purchase rate and sale rate of foreign exchange. Today it achieves 25 AMD during trade of USD and sometimes even more in trade with Euros. Such a serious margin usually took place in the country in more serious variation of rates in conditions of not created foreign exchange markets in the beginning of transition period. In `normal' conditions, namely in the beginning of 2004, margin in trade with USD ranged between 2-7 AMD. On request of ARKA to explain the reason to such a big difference between sale and purchase rates, the dealers of some commercial banks said that they go for this because average rate really makes 460 AMD per $1, at the exchange rate of CBA in 478 AMD. That is why the banks had to increase the margin to minimize currency risks and receive income from foreign exchange operations in account of rate difference. Otherwise the banks would have losses.
Thus, most of the dealers, though do not exclude future strengthening of AMD in the beginning of the next year, do not give the forecasts in short-term perspective. No one of them gives any comments, explaining it that existing situation `does not have any logics, and it is outside of all economic laws'. Everything depends on what will take place at international financial markets, what moods and trends will be created there, what inflation and what macroindicators will be created in USA and European countries. It is also noted that not the last role in rate trends was played by not so much by exporters, but large investments in Armenia. Nevertheless, part of the dealers expressed opinion that fast decrease of USD rate in last days and in the future more than likely won't take place. At this, dealers note serious volumes of sale-purchase deals at foreign exchange market of Armenia. Along with that on the threshold of holidays Armenia continues receive large private transfers and mostly in USD. At this, received assets immediately turn to drams for making purchases.
Note that in the beginning of Aug 2004, when ARKA News Agency conducted poll among commercial banks, the banks forecasted that by the end of 2004 the rate of national currency in the country will stabilize around 530-550 AMD per USD. Besides, Armenian banks did not exclude that in result of the year, inflation can make 8%. At the moment, in 11 months of 2004 deflation in Armenia made 0.3%.
According to ARKA News Agency data, 26.94% of profit accrued by commercial banks of Armenia in Jan-Sep 2004 was provided in account of net income from foreign exchange operations (1995.3 million AMD on 19 banks). With consideration of Armsvyazbank, net income from currency operations of banking system made 2448.1 million AMD. Compared to the same period of 2003, income on foreign exchange operations of 19 banks grew by 816.1 million AMD, or by 69.2%. ($1 - 478 AMD).
L.D.
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