Another price increase in Armenia

Susanna Petrosyan, Yerevan. Exclusively to VK

The dramatic increase of dollar at the local currency market became one of the most discussed themes in recent weeks in Armenia. During last few days dollar went up by 1.3 points (0.56%) and costs 411.03 drams.

The course began to change in the beginning of 2012, by April dollar reached 386.15-392.16 drams, i.e. by 1.5%. In May dram devalued by 3.5%. The dynamics caused panic at the currency market and among the population.

The Armenia Central Bank Council registered that deepening of uncertainty in decisions on debt problems in the EU caused dramatic going-up of dollar toward currencies of basic partners of Armenia – the European Union and Russia. It reflected on the currency market of Armenia negatively.

Many experts believe that swing of currencies is normal. There are two reasons for this: increase of demand on dollars at the internal market, and oil price fluctuations.

Moreover, volumes of private transfers influence seriously the exchange course of dram. The role of private transfers is great in the Armenian economy. It concerns millions dollars. According to the former premier Grant Bagratyan, the dynamics of transfers changes from month to month, depending on inflows and outflows of labor migrants.

However, some experts believe that dollar going-up has positive sides too. Those citizens who have dollar savings are in benefit. Furthermore, devaluation of the national currency causes export increase. Stabilization of dram can follow tourism season in Armenia, when tourists will exchange their currency into drams.

Nevertheless, considering the fact that Armenia is mainly an importer, dollar course increase will lead to price increase: “Devaluation of dram will cause damage to the import sector first of all, because imported products’ prices will increase,” the chairman of the Republican Employers Union of Armenia, Gagik Makaryan, thinks.

Vaagan Khachatryan, an expert on economics, notes that the state budget of Armenia presupposes 378.96 drams for one dollar, while today dollar costs 410-413 drams: “Serious problems will appear in local industry. In next 15_20 days prices will go up and local producers will have no resources to cover production expenses. We should impulse the Armenian economy artificially, but no steps are being made at the moment. The Armenian economy needs investment. The only way out is to establish beneficial conditions for investments, but we have to big taxes.”

Specialists are skeptical about return of dollar course at the previous level: “Experience shows that after going-up of dollar, there is no significant devaluation of it,” the economic expert Aik Mnatsakanyan believes. Many experts predict further dollar course increase.