– Mr. Javadyan, after the shock of March 3 the value of the USD gradually increases. Is this the reflection of the demand of the market? Even now there are opinions that the CB interferes with the maintenance of the rate. With the same logic if the CB doesn’t control the rate it will go even upper.
– There is no issue, this is merely the reflection of the market. The banks deal amongst each other. I have already mentioned that the CB participation is minimal and I am sure it cannot be a one-sided process. It is possible that the rate may go down today or tomorrow. We have surveyed the situation and at this moment there is no pressure on the banking system. I don’t think there is any need for worry at this moment. There is no panic among the bank customers, importers and population.
– How do you explain the incomparably low volume of transactions in the stock market? We are already used to having transactions worth 20-30 million USD.
– Everybody needs time for orientation and it’s normal. After the correction of the rate there will be high-volume transactions.
– As of the USD rate there are rumors that during the recent months the CB has made interventions in the amount of 400-800 million USD. In fact how much was the intervention of the CB during the recent months?
– We will soon publicize the volume of interventions and you will see. It is less than 800 million and less than 400 million. This number is not essential because these amounts are in our banks. The banks lost a lot of dollars due to the policy of the CB and the government of the previous years. The volume of deposits of physical entities was 65%. We during the past three months had the opposite ratio – 70/30. And the total volume of deposits in Armenia is 500 billion USD. So if we make calculations we will see that the interventions of the recent months were substituted in AMD deposits in the banks.
– There is an opinion that as a result of interventions the major importers received super profits.
– No, most of that went to the exchange of deposits. The rest of it was given to commercial banks. Due to this the banks had super-liquid means. During the past 4-5 months the banks had bought 280 million USD. Perhaps part of it was bought by the importers. It’s clear that the ArmRusGazProm should have monthly bought 25-30 million USD in order to pay the gas price. The banks in their turn should have somehow attained this currency. But part of the importers were using the service of others but not the banks.
– But do you think it was expedient to make hogh-level interventions for such a long time in order to keep the USD rate at 305 AMD. Wasn’t this fund used from external reserves gone in vain?
– No, this money is currently in our internal reserves because it is on the account of banks in the CB. There was no outflow of money from Armenia. At the end of December and beginning of March there was no change in our external reserves. Part of the importation was taken care of due to the money left over in the economy.
– How do you explain the fact that the CB decided to release the rate on March 3. Weren’t many experts and analysts persuading the CB for a long time to devalue the AMD?
– Trust me, we were planning to do it long ago. We were examining the situation and realized that March is the best time to do it. We realized that the AMD deposits reached 30%. The banks at that time had liquidity of 700 million USD. It was convenient because the situation was stable in the financial system because at that time we had clear calculations about the expectation of the currency.
– The CB was persuading the citizens for years to keep their savings in AMD but as a result the ones, who saved in AMD suffered and continue to lose a lot of money.
– Even now I am saying save your money in AMD. Trust me they didn’t suffer in the long-run. The stability of the monetary unit is not determined by the revaluation or devaluation; it is determined by the inflation. If there is 20-25% inflation in Armenia then they will suffer because the bank rates will not exceed the inflation rate. But at this moment we almost don’t have inflation and their bank rates amount to 10-12% annually. This means that they are not losing anything.
– But people save deposits not to refund inflation but to receive incomes.
– They will receive incomes as well because when the banks see that there is high inflation they will increase the bank percentage. We already gave that impulse. We increased the percentage of re-financing. I personally keep my savings in AMD.
– Are you sure that the increase of the gas price and electrical power will cause only 8-9% inflation for staple goods?
– Indeed, it fits in the 9% inflation framework predicted by us.
– Mr. Javadyan, in your opinion in what stage of the crisis is Armenia in at this moment? Have we reached the peak yet?
– I wouldn’t like to make forecasts. In my subjective opinion the world is already approaching the peak.