Or as our government liked to say back in the day, on the background of the activation of the economy our national monetary unit is being strengthened. As the PR service of the RA Central Bank informs on June 25 transactions in the amount of 3.080.000 were made at the NASDAQ OMX Armenia OJSC with the rate of 369 AMD per USD. And the closing rate was again 369. And during the period of June 21-25 at NASDAQ OMX the amount of transaction was 20.010.000 USD with an average rate of 369.88 AMD per USD. The banks bought 77.249.652 USD at the rate of 369.88 and sold 68.456.234 USD at the rate of 371.12. Yesterday the trade banks would buy the USD at 368 and would sell at 370. Thus, during the last week the national currency revaluated by several drams and during the last 3 months the national currency revaluated by 7.5. Let us remember that in mid-March the AMD dropped down will 405 AMD per USD. There were predictions that the devaluation would continue by reaching 480 per USD, which caused a real panic among the people, who receive their incomes in the AMD. Now we are witnessing the opposite picture. The 7.5% revaluation of the AMD is a quite serious factor, which is hard to overestimate. This means that the imported goods should drop their prices by 7.5%% and the exported ones should become more expensive. Of course, the imported goods are becoming cheaper not for the average Armenian consumers but for the importers. The 7.5% becomes for them a profit dropped from the sky as a gift and to a certain extent becomes reserve for them. It means that the importers have room to drop their prices up to 7.5%. Thus the revaluation of the AMD is harming the internal producers and we have numerously spoken about this. Why is the AMD revaluating? There are two main factors for the AMD revaluation – the monetary remittances and foreign trade. In the line of the foreign trade let us mention that despite the growth importation by 64.5% compared to 28.5% growth of exportation during the first 5 months of this year, the negative balance still remains. Thus, the volumes of exportation amounted to 364.1 million USD and importation – 1.4 billion USD. It means that during the first five months of the current year over 1 billion USD has exited from Armenia. We can assume that in these conditions the remittances played a significantly different role. Of course, we cannot mention accurate data at this moment as to what the amount of the monetary transfers were to Armenia but taking into account to activation of the donor states – the US and Russia to a certain extent we may assume that the amount has increased compared to the previous year. From here we can assume that the care of our compatriots living and working abroad causes the opposite effect – AMD revaluation in Armenia, decrease of the people receiving incomes in the form of foreign currency and slump of exportation volumes. After this, the part of the preamble, the idea expressed by the RA minister of economy Nerses Yeritsyan brought up two days ago. “We should understand that we get to deal with challenges to a greater extent than with benefits. The understanding of our team about the private remittances has been considered that the transfers are challenges for us. They solve serious issues in the form of poverty reduction but they cannot be protracted and we should be able to provide another type of development,” said Yeritsyan by adding that we should make sure that people start to prefer to work instead of relying on monetary remittances and surviving. Do you know why this is interesting? It is interesting with the phrase “our team.” The majority of Armenians views Prime Minister Tigran Sargsyan in the center of this honorable team. So we should assume that the growth of remittances for Tigran Sargsyan is also a challenge. And this is already astounding. Only 4 years ago when the then-chair of the Central Bank Tigran Sargsyan was being blamed of AMD revaluation he would not only explain this by the economic growth but would not see anything dangerous in it. Moreover, the AMD revaluation was presented as an opportunity for development. “In the event of the devaluation of the foreign currency the investments of new technologies becomes more beneficial, which can raise the productivity and we’d like to point out that today is the right time and we have an exclusive opportunity to direct these means to the development and investment of modern technologies in Armenia. This will in several years increase the productivity of enterprises and will make them competitive in Armenia as well as worldwide,” this thought was brought up by Tigran Sargsyan in November 2006 during the roundtable discussion of RA Union of Producers and Businessmen. It is no less important that back then the members of the Union of Businessmen would oppose this vision by claiming that in the event of uncontrollable and unpredictable currency rate it would be impossible to develop and realize any serious business. Besides that, they were mentioning that for development a normal competitive field should be formed and shaped, annihilate the black market, nepotism and corruption. Moreover, back then they wouldn’t forget to add that all that doesn’t depend only in Tigran Sargsyan as chairman of the CB. And now when it is the job of Tigran Sargsyan to fight against these phenomena this union behaves quite loyal to him. Nonetheless, at this point it is hard to say in what direction the currency rate will float (or which direction it will be directed to float). But today the reality is that in parallel with the conversations of the necessity of economy diversification, contribution to industry a process is taking place – AMD revaluation, which doesn’t fit in the logic of these conversations at all.
