Aftermath of Dram's devaluation
ARMENIA: RISE IN PRICES FOR BUTTER, MEDICINE AND DOMESTIC APPLIANCES UNJUSTIFIED
PanARMENIAN.Net
06.03.2009 15:43 GMT+04:00
/PanARMENIAN.Net/ The RA State Commission on the the Protection of
Economic Competition of has registered an ungrounded price increase
on butter, vegetable oil, medicaments, and household appliances
in markets, Ashot Shakhnazaryan, head of RA State Commission on
the Protection of Economic Competition said during the briefing in
Yerevan. Administrative investigations will be conducted against a
number of entrepreneurs who have increased the prices. We have received
a lot of complaints from the citizens regarding the price increase
for these very goods. For instance, we learnt that the medicament
importers, by mutual consent, decided to raise the prices by 25% at
once. The State Commission on the Protection of Economic Competition
will proceed with the monitoring for another two weeks and the list
of negligent entrepreneurs will be handed over to the Committee on
State revenue .This body will take care of the law breakers within
its power, Ashot Shakhnazaryan emphasized.
As the head of the Commission assured there are no grounds
for panic. We observe how the dollar rate is gradually falling:
350-360drams per $1.Tomorrow already the consumers will notice the fall
in the prices on petrol and diesel fuel, remarked Shakhnazaryan. At
the same time he emphasized that Armenia is a country of free economic
competition, and the price increase on staple food products may be
related to the price changes in international markets.
PanARMENIAN.Net
06.03.2009 15:43 GMT+04:00
/PanARMENIAN.Net/ The RA State Commission on the the Protection of
Economic Competition of has registered an ungrounded price increase
on butter, vegetable oil, medicaments, and household appliances
in markets, Ashot Shakhnazaryan, head of RA State Commission on
the Protection of Economic Competition said during the briefing in
Yerevan. Administrative investigations will be conducted against a
number of entrepreneurs who have increased the prices. We have received
a lot of complaints from the citizens regarding the price increase
for these very goods. For instance, we learnt that the medicament
importers, by mutual consent, decided to raise the prices by 25% at
once. The State Commission on the Protection of Economic Competition
will proceed with the monitoring for another two weeks and the list
of negligent entrepreneurs will be handed over to the Committee on
State revenue .This body will take care of the law breakers within
its power, Ashot Shakhnazaryan emphasized.
As the head of the Commission assured there are no grounds
for panic. We observe how the dollar rate is gradually falling:
350-360drams per $1.Tomorrow already the consumers will notice the fall
in the prices on petrol and diesel fuel, remarked Shakhnazaryan. At
the same time he emphasized that Armenia is a country of free economic
competition, and the price increase on staple food products may be
related to the price changes in international markets.
HEALTH IN ARMENIA TO COST 30% MORE EXPENSIVE
PanARMENIAN.Net
06.03.2009 13:54 GMT+04:00
/PanARMENIAN.Net/ The prices for medicine have gone up 30% as result of
dram devaluation. Costs of infant food will also increase, according to
a survey conducted by a PanARMENIAN.Net in the capital's drug stores.
Natalie Pharm company managers said they will review prices. Given 12%
customs duties and 20% VAT, the prices will go up, they said.
The CB Tuesday decision on transition of floating rate, the
dram-to-dollar rate reached AMD400/$1. The next day the currency
market stabilized in some way and the rate was fixed at AMD373/$1.
The prices for imported goods have gone up 10-12%. Meanwhile, NGO
researches testify a 25-30% increase.
Armenian Prime Minister promised that the process will stabilize
within next few days and will not be shocking for the population.
PanARMENIAN.Net
06.03.2009 13:54 GMT+04:00
/PanARMENIAN.Net/ The prices for medicine have gone up 30% as result of
dram devaluation. Costs of infant food will also increase, according to
a survey conducted by a PanARMENIAN.Net in the capital's drug stores.
Natalie Pharm company managers said they will review prices. Given 12%
customs duties and 20% VAT, the prices will go up, they said.
The CB Tuesday decision on transition of floating rate, the
dram-to-dollar rate reached AMD400/$1. The next day the currency
market stabilized in some way and the rate was fixed at AMD373/$1.
The prices for imported goods have gone up 10-12%. Meanwhile, NGO
researches testify a 25-30% increase.
Armenian Prime Minister promised that the process will stabilize
within next few days and will not be shocking for the population.
IMPACT OF THE FLOATING RATE ON ARMENIA'S REAL ESTATE MARKET
Alisa Gevorgyan
"Radiolur"
06.03.2009 15:13
How did the real estate market of Armenia react to the floating
exchange rate? It turns out that unlike oil and sugar, the interest
of our compatriots in real estate has abruptly decreased. There
has been complete tranquility on the real estate market over the
past days. What's the situation today, when the fluctuations of the
exchange rate have relatively stabilized?
"There is absolutely no sale," representatives of the "Modern Realty"
real estate company say.
"The peace at the real estate market will be maintained until the
dram and the dollar finally clarify relations," representatives of
companies engaged in real estate sale say.
Alisa Gevorgyan
"Radiolur"
06.03.2009 15:13
How did the real estate market of Armenia react to the floating
exchange rate? It turns out that unlike oil and sugar, the interest
of our compatriots in real estate has abruptly decreased. There
has been complete tranquility on the real estate market over the
past days. What's the situation today, when the fluctuations of the
exchange rate have relatively stabilized?
"There is absolutely no sale," representatives of the "Modern Realty"
real estate company say.
"The peace at the real estate market will be maintained until the
dram and the dollar finally clarify relations," representatives of
companies engaged in real estate sale say.
WORLD BANK PRAISES ARMENIA DRAM DEVALUATION
Agence France Presse
March 4, 2009 Wednesday 1:38 PM GMT
The World Bank praised Armenia Wednesday for allowing its currency to
devalue but also warned against allowing the move to stoke inflation
in the ex-Soviet republic.
The dram lost 20 percent in value against the US dollar at exchange
offices Tuesday after the Central Bank announced that it had decided
to limit its interventions on the foreign currency market, returning
to a free-float policy.
"Greater flexibility of the exchange rate will help Armenian companies
to compete more successfully in global and domestic markets and will
pave the way for high and sustained growth," the World Bank's director
in Armenia, Aristomene Varoudakis, told reporters.
He said that the central bank had spent 500 million dollars (400
million euros), a third of its foreign currency reserves, on propping
up the dram since October.
But Varoudakis also called on Armenia to ensure strict controls on
prices for basic goods.
"Economic competition bodies must monitor strictly to ensure there
is not a sharp and unreasonable increase in prices," he said.
After rising from 305 drams to the dollar to more than 400 drams by
late Tuesday, the dram's rate fell to 360-370 drams to the dollar at
exchange offices Wednesday. The central bank's official rate Wednesday
was 372 dram to the dollar.
Armenia has been hard hit by the global economic downturn, with
thousands of people losing their jobs in the small Caucasus mountains
country, according to local media.
ARMENIA: CURRENCY DEVALUATION LEAVES CONSUMERS FEELING UNEASY
Haroutiun Khachatrian
EurasiaNet
March 5 2009
NY
Two days after Armenia's Central Bank let the dram float against the
dollar, an uneasy calm has returned to Yerevan after a round of panic
buying cleaned many stores out of basic food items.
At the close of trading on March 5, the dram stood at 366.38
against the dollar, marking a slight gain from its previous close
of 372.95. The rate represents just under a 20 percent change from
March 3, when the Central Bank stopped trying to keep the Armenian
currency steady.
A few hours after the announcement, Armenians went on a collective
buying spree. Staples -- such as sugar, vegetable oil, macaroni,
and rice -- quickly disappeared from several Yerevan grocery stores
visited by a EurasiaNet reporter. In other stores, clerks refused to
sell the items until prices were revised to reflect the new dollar-dram
exchange rate.
Television news reports showed that some shops were closed for several
hours "for technical reasons," while others were crowded by people
trying to buy as much food as possible.
By March 5, the situation appeared to have calmed. The owner of
one Yerevan grocery store told EurasiaNet that some items, such as
imported juices, remain at previous prices; others, though, have
increased by 10 percent at the supplier's request. Another grocery
store owner noted that new, higher-priced supplies of sugar and flour
were selling slowly, and described shoppers as "quite angry."
For the government, trying to keep a lid on resentment has become a
top priority. Prime Minister Tigran Sargsyan, a former head of the
Central Bank, appeared on public television late on March 4 to urge
viewers to avoid a panic, which, he alleged, could spark a vicious
cycle of escalating prices.
Armenia's price control agency, the State Commission for Protection
of Economic Competition, also tried to ease consumers' fears. After
the dram's drop, prices increased in only four or five out of the 40
food categories, according to Ashot Shahnazarian, the Commission's
head. The Commission has no plans as yet to take legal actions against
food sellers for speculation, he added.
World Bank Country Office Manager Aristomene Varoudakis emphasized
the need for Armenian state agencies to be "vigilant, strong and
independent to prevent [a] speculative growth of prices."
The International Monetary Fund's representative in Armenia took
a similar approach on speculation. "It is natural that [a] dollar
appreciation would make imported goods more expensive. But for goods
that were already in the supermarkets, there is no reason for them
to become more expensive," said Nienke Oomes in an interview with
Shant TV on March 3.
One economist believes, though, that the panic has already passed. With
time, importers will gradually move to more reasonable behavior,
predicted Ashot Khurshudian, an expert at Yerevan's International
Center for Human Development. Khurshudian characterized the Central
Bank's 2009 inflation target of 8 to 10 percent as still "quite
realistic."
Both the IMF and the World Bank have cheered the Central Bank's
decision to stop buttressing the dram. The IMF subsequently
agreed to loan Armenia $540 million to shield its economy from the
global financial crisis; $239 million of the sum could be extended
immediately. The funds come on top of a 15-year $500 million loan from
the Russian Federation. [For details, see the Eurasia Insight archive].
Experts had repeatedly urged a return to what is known as a "floating
rate policy" to increase the competitiveness of the Armenian economy,
which is partly cut off from outside trade thanks to its closed borders
with Azerbaijan and Turkey. [For background see the Eurasia Insight
archive]. Central Bank Chairman Artur Javadian told reporters that
the delay in implementing the floating-rate policy had been intended
to keep the banking system stable. The bank has forecast a 24 percent
decrease on average in the dram's value "in the nearest future."
Sensing an opportunity to score political points, the Armenian
National Congress, a bloc of opposition parties led by ex-President
Levon Ter-Petrosian, issued a statement claiming that the delay in
restoring the floating rate was designed to help oligarchs who run
import monopolies. The bloc claims that the policy cost the Central
Bank $800 million in foreign reserves over the last four to five
months. It did not substantiate the claim.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Haroutiun Khachatrian
EurasiaNet
March 5 2009
NY
Two days after Armenia's Central Bank let the dram float against the
dollar, an uneasy calm has returned to Yerevan after a round of panic
buying cleaned many stores out of basic food items.
At the close of trading on March 5, the dram stood at 366.38
against the dollar, marking a slight gain from its previous close
of 372.95. The rate represents just under a 20 percent change from
March 3, when the Central Bank stopped trying to keep the Armenian
currency steady.
A few hours after the announcement, Armenians went on a collective
buying spree. Staples -- such as sugar, vegetable oil, macaroni,
and rice -- quickly disappeared from several Yerevan grocery stores
visited by a EurasiaNet reporter. In other stores, clerks refused to
sell the items until prices were revised to reflect the new dollar-dram
exchange rate.
Television news reports showed that some shops were closed for several
hours "for technical reasons," while others were crowded by people
trying to buy as much food as possible.
By March 5, the situation appeared to have calmed. The owner of
one Yerevan grocery store told EurasiaNet that some items, such as
imported juices, remain at previous prices; others, though, have
increased by 10 percent at the supplier's request. Another grocery
store owner noted that new, higher-priced supplies of sugar and flour
were selling slowly, and described shoppers as "quite angry."
For the government, trying to keep a lid on resentment has become a
top priority. Prime Minister Tigran Sargsyan, a former head of the
Central Bank, appeared on public television late on March 4 to urge
viewers to avoid a panic, which, he alleged, could spark a vicious
cycle of escalating prices.
Armenia's price control agency, the State Commission for Protection
of Economic Competition, also tried to ease consumers' fears. After
the dram's drop, prices increased in only four or five out of the 40
food categories, according to Ashot Shahnazarian, the Commission's
head. The Commission has no plans as yet to take legal actions against
food sellers for speculation, he added.
World Bank Country Office Manager Aristomene Varoudakis emphasized
the need for Armenian state agencies to be "vigilant, strong and
independent to prevent [a] speculative growth of prices."
The International Monetary Fund's representative in Armenia took
a similar approach on speculation. "It is natural that [a] dollar
appreciation would make imported goods more expensive. But for goods
that were already in the supermarkets, there is no reason for them
to become more expensive," said Nienke Oomes in an interview with
Shant TV on March 3.
One economist believes, though, that the panic has already passed. With
time, importers will gradually move to more reasonable behavior,
predicted Ashot Khurshudian, an expert at Yerevan's International
Center for Human Development. Khurshudian characterized the Central
Bank's 2009 inflation target of 8 to 10 percent as still "quite
realistic."
Both the IMF and the World Bank have cheered the Central Bank's
decision to stop buttressing the dram. The IMF subsequently
agreed to loan Armenia $540 million to shield its economy from the
global financial crisis; $239 million of the sum could be extended
immediately. The funds come on top of a 15-year $500 million loan from
the Russian Federation. [For details, see the Eurasia Insight archive].
Experts had repeatedly urged a return to what is known as a "floating
rate policy" to increase the competitiveness of the Armenian economy,
which is partly cut off from outside trade thanks to its closed borders
with Azerbaijan and Turkey. [For background see the Eurasia Insight
archive]. Central Bank Chairman Artur Javadian told reporters that
the delay in implementing the floating-rate policy had been intended
to keep the banking system stable. The bank has forecast a 24 percent
decrease on average in the dram's value "in the nearest future."
Sensing an opportunity to score political points, the Armenian
National Congress, a bloc of opposition parties led by ex-President
Levon Ter-Petrosian, issued a statement claiming that the delay in
restoring the floating rate was designed to help oligarchs who run
import monopolies. The bloc claims that the policy cost the Central
Bank $800 million in foreign reserves over the last four to five
months. It did not substantiate the claim.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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