Currency Market: "There is definitely an artificial component. If it weren't for that, the price of the dollar wouldn't drop in 2-3 days, but rather in a month," Nairi Sargsyan

“Recently, there have been trends towards the appreciation of the dram. Nairi Sargsyan, president of the Chamber of Auditors, reminds in an interview with “Pasti” that the exchange rate of the dollar is formed based on supply and demand, and in this context, he mentions the objective reasons for such trends.

“One of the reasons is the rise in copper prices in the global market, as well as the increase in external debt. Among the objective reasons are the elections, because large sums of money are spent, and people typically hold reserves in foreign currency. When expenses need to be made, naturally, the foreign currency is replaced with Armenia’s currency. Another factor is a slight boost in tourism and, of course, the remittances sent to Armenia by workers abroad. An objective reason is also the seasonal export of agricultural products. These objective reasons are characteristic of each summer season, regardless of government actions, resulting in a further decline in the exchange rate and appreciation of the dram,” he said, according to “Pasti” newspaper.

However, Nairi Sargsyan also sees a subjective reason: “If we consider the period during which the dram appreciated rapidly, we understand that the aforementioned reasons may not have had that much of an impact, because they affect exchange rate fluctuations in the long term. In this case, the rate dropped suddenly from 525-528 to 497-498 in just a few days. In my opinion, such declines occur due to intervention. I do not want to predict what interests the government may have or how it might interfere, but it is clear that there is an invisible hand at play here.”

“I see dangers here; if these concerns are indeed a reality—and I am convinced that significant intervention has occurred—then this pace will not continue; rather, it may spiral out of control after some time. There is definitely an artificial component here; if it weren’t, the price of the dollar wouldn’t drop in 2-3 days, but rather in a month,” Sargsyan concluded. For more details, refer to today’s edition of the newspaper.