Armenia in panic over dram turmoil

/AzerNews/

By Mushvig Mehdiyev

The Armenian dram’s overwhelming depreciation has resulted in an increased demand for dollar in the country, as queues were reported at the Armenian commercial banks, when many citizens hoped to convert their savings into a hard currency.

The situation has become so threatening that even some businesses and traders reportedly suspended sales, waiting for stability in the currency market.

As of December 16, one dollar was sold for 550 drams in Armenia, while many exchange offices in Yerevan refused to sell dollars and euros, saying that they did not have foreign currency.

Despite the fact that the exchange rate at commercial banks is lower now, they apply some restrictions in exchange deals, according to ArmeniaNow, a local media source.

The commercial banks sell only fixed amounts of dollars (not more than $1,000 per customer) and only to citizens who have accounts in those banks.

Yerevan trade centers also in panicky mood, as vendors at Yerevan’s Surmalu wholesale and retail market refused to trade, saying that the dollar rate is climbing each hour and inflicts huge losses on them while selling items in drams.

“Almond was 7,500 drams (about $13) half an hour ago, but now it is 8,000 drams (about $14), what shall we do? We are losing, we’d better close and not to trade at all than losing chances to keep on our imports later,” a trader at Surmalu said.

The financial turmoil in Armenia is threatening almost all people from authorities to the ordinary citizens. Weakening position of the dram promises a further collapse in the country's economy, which is currently paralyzed by several determinants, including the falling export, limited foreign investments and surging external debts.

Economic experts believe that the prices in the Armenian markets have taken a sharp rise this year ahead of the New Year holiday season compared to the previous years, linking it to the dram and ruble devaluation, as well as the dollar’s significant appreciation in the world market.

Sociologist Aharon Adibekyan thinks that the Armenian people make less preparations for the New Year holiday this time given the disparity between their financial status and bullish prices on the markets.

“There is no sense of taking a bank loan and repaying it during the whole year,” he said, calling the people to consider their pockets before laying the New Year table.

Dethronement of the Armenian dram started all while the Russian ruble began to slide to all-time low following the isolating sanctions by the western forces. Experts claim that Armenia's tightening relations with Russia, amid the partnership within the Eurasian Economic Union, show green light for future challenges in its economy if Russia fails to tackle the deepening economic hassle facing it.

Opinions of the experts on Armenia's EEU integration confront, since a group of specialists believe that the union is beneficial for Armenia given its huge common market of 170 million people. Nonetheless, the another group of experts claim that a huge market doesn't bear any importance on the background of Armenia's weak domestic production and strong external dependence.

If the country is unable to input a variety of products on the EEU market, it is not logical to talk about an economic benefit from the membership at the alliance.