After a short break dollar continues rising in the price again. Yesterday the average exchange rate of US dollar in NASDAQ OMX stock exchange was 407.45 dram.
The rate of dollar grew by 0.45% (1.81 points). Last time dollar was above this exchange rate was 6 years ago, on August 2006, when the exchange rate reached 407.51 drams.
Yesterday in the stock market 3.7 million dollars was sold. Obviously that is the intervention on the part of the Central bank, which did not bring to any results as the exchange rate continued growing in banks and currency exchange offices. Banks were buying dollar at 405.7 and selling at 409.26 drams. Some banks even increased the price of selling dollar up to 412. Now it is clear that the processes in the stock exchange and currency market will generate more rumors and confusion.
It is expected that officials and experts of Armenia will organize press-conferences and give interviews to call on people not to panic and worry. For example, several days ago an economist from the State University of Yerevan was trying to explain that the exchange rate changes were seasonal and were connected with growth of tourism. What he means is that people are buying dollars to spend their vacations in other countries. Besides the main purpose of making people to come down, this announcement is also trying to show that people have money and they are spending dollars on vacations abroad. However, the weak point of this statement is that this is happening in May, which is really not a hot travel season. If this statement is true, there should have been such dynamics during the past years as well. Comparing with the past year, last year during the same period the exchange rate grew by 1.5%, but this year in the same period the growth was by 3.8%. This means that the exchange rate growth tendency was by 2.5 times faster this time. This shows that this time we are dealing with a different thing.
In fact people in the country are not thinking about spending their vacation in other countries but instead of that they are thinking about surviving and handling their routine problems as the inflation is growing. One of the main reasons for inflation is the exchange rate fluctuation. It is a simple formula that if the import capacity of a country does not differ much from the domestic trade circulation, naturally the growth of the exchange rate for foreign currency will result in growth of prices (for example, during January-April of this year the import amounted to 510.6 bln drams, and the trade circulation amounted to 534.8 bln).
However, people should not panic because e have a bright spot such as the national statistics service, which brings and spreads optimism everywhere and it doesn’t matter what people feel in their real life.
Recently the national statistics service published the consumer prices indices for January-May 2012. According to this official information, during the past year the consumer prices have grown by half per cent only, and even the pries of consumer products have grown by 1.6%.
Growth of consumer prices in May 2003-2012 (compared to December of previous year, %)
“In May 2012 compared to April there was inflation of consumer products prices by 2.6%, which mostly affected the prices of vegetables, potato, dairy products and eggs. 13 groups of consumer products have been monitored, 8 out of which became cheaper by 15.5-0.2%, and 4 out of this number became more expensive by 0.1-0.2%, and one type of product stayed at the same price,” writes the statistics report.
If we compare May with December of the previous year, the inflation rate is very low and is a record compared to the other years. During the first five months of this year the level of inflation was 0.8%, while during the previous year the lowest rate was observed in 2005 and was 2.9%.
Even though it is written that the report covers January-May, obviously it does not contain the price growth during the last month of that period. The report is published in the end of the month and the statistics service staff would not be able to amend the report in such a short time. However, they may not change it later either because they do not want people panic.