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CB: RAPID TRANSITION FROM FIXED EXCHANGE RATE TO FLOATING MORE EFFECTIVE
PanARMENIAN.Net
04.03.2009 20:09 GMT+04:00
/PanARMENIAN.Net/ The RA Central Bank has made a decision to limit its
intervention in the foreign exchange market and return to the policy
of the floating rate in order to eliminate the dram devaluation
expectations, said Vache Gabrielyan , the Deputy Chairman of RA
Central Bank at the press conference.
He emphasized that the gradual transition from the fixed rate to the
floating rate would have been "less effective and cost more. Such is
Russia's experience where despite huge expenditures, the inflation
expectations do not change. The experince of countries like Georgia,
Kazakhstan, Russia, Belarus where this transition was taking place
gradually proves that devaluation and inflation expectations are not
eliminated. Whereas in countries where such transitions take place
more abruptly, the currency devaluation expectations are eliminated
considerably faster," he added.
"Overall, said Gabrielyan, the Central Bank, in fact, has not
changed its policy in long-term period and from the point of view
of macroeconomics has never made any claims about the transition
to the fixed rate. A considerable pressure on the currency rate
of Armenia became obvious still in autumn when the country could
not import sufficient goods because of the military actions in
the neighbouring Georgia. If the Central Bank had allowed sharp
fluctuations of the currency rate, it would have caused considerable
problems from the point of view of financial stability, so rate
was temporarily fixed. The return to the policy of floating rate in
Armenia was necessary to immediately eliminate the national currency
devaluation expectations", said Gabrielyan adding that the stability
and liquidity of the bank system based on February monitoring results
also contributed to it.
The day before, only within several hours, the dollar rate in
Armenia rose dramatically to 360dram per $1, the euro rate reached
440drams. The dollar rate at exchange offices had been 305-310 per $1,
the euro rate-387 accordingly. The basic reason for such sudden surge
of foreign currencies against the dollar was the statement made by
the head of RA Central Bank, Arthur Javadyan, according to which the
Central Bank of Armenia has made a decision to limit its interference
in the foreign exchange market and to go back to the policy of the
floating exchange rate.
PanARMENIAN.Net
04.03.2009 20:09 GMT+04:00
/PanARMENIAN.Net/ The RA Central Bank has made a decision to limit its
intervention in the foreign exchange market and return to the policy
of the floating rate in order to eliminate the dram devaluation
expectations, said Vache Gabrielyan , the Deputy Chairman of RA
Central Bank at the press conference.
He emphasized that the gradual transition from the fixed rate to the
floating rate would have been "less effective and cost more. Such is
Russia's experience where despite huge expenditures, the inflation
expectations do not change. The experince of countries like Georgia,
Kazakhstan, Russia, Belarus where this transition was taking place
gradually proves that devaluation and inflation expectations are not
eliminated. Whereas in countries where such transitions take place
more abruptly, the currency devaluation expectations are eliminated
considerably faster," he added.
"Overall, said Gabrielyan, the Central Bank, in fact, has not
changed its policy in long-term period and from the point of view
of macroeconomics has never made any claims about the transition
to the fixed rate. A considerable pressure on the currency rate
of Armenia became obvious still in autumn when the country could
not import sufficient goods because of the military actions in
the neighbouring Georgia. If the Central Bank had allowed sharp
fluctuations of the currency rate, it would have caused considerable
problems from the point of view of financial stability, so rate
was temporarily fixed. The return to the policy of floating rate in
Armenia was necessary to immediately eliminate the national currency
devaluation expectations", said Gabrielyan adding that the stability
and liquidity of the bank system based on February monitoring results
also contributed to it.
The day before, only within several hours, the dollar rate in
Armenia rose dramatically to 360dram per $1, the euro rate reached
440drams. The dollar rate at exchange offices had been 305-310 per $1,
the euro rate-387 accordingly. The basic reason for such sudden surge
of foreign currencies against the dollar was the statement made by
the head of RA Central Bank, Arthur Javadyan, according to which the
Central Bank of Armenia has made a decision to limit its interference
in the foreign exchange market and to go back to the policy of the
floating exchange rate.