YEREVAN, October 4. /ARKA/. Individual deposits in drams in Armenia totaled AMD 76.281 billion by late August after shrinking 0.96% over the month. We think this was due to devaluation of the national currency in August and vacation season, when people traditionally spend their savings. The dram weakened 1.39% in August to AMD 362.91 per one dollar.
Individual dram deposits have grown 16.6% since the beginning of this year thanks to the interest rates increased 1.35% to 9.45% as well as the 4.4% revaluation of the national currency against the U.S. dollar.
On the other hand, obscure prospects for development of the world economy and fears over a double-dip crisis curb the growth of dram deposits, which have failed to reach their pre-crisis levels. Individual deposits in foreign currencies reduced 1.1% in August to AMD 233.069 billion. They have grown only by 2.1% since early January because of devaluation of the dollar over the mentioned period. Interest rates lowered by 0.9% to 5.3% have reduced individual deposits in foreign currencies as well.
The share of individual dram deposits in the country’s total individual deposits has grown 1.6% since early January to 24.7%. Despite that, the share of individual dram deposits is quite small in Armenia, compared with other CIS countries. It means people in Armenia prefer to keep their savings in foreign currencies rather than in drams. Legal entities’ dram deposits have already resumed their growth after hitting the record low in March.
They have grown 3.8% over August alone, but shrank 1.4% since the beginning of this year to AMD 86410 million.
Agriculture and construction face decline this year, compared with the previous year.
Retail trade shows no growth. Armenian enterprises can’t build up their profits and lodge temporarily free financial resources in banks even despite some rally in industry and services sectors.
Legal entities’ deposits in foreign currencies show close correlation with foreign exchange rates – they grew to their record high as the dollar strengthened against the dram in March 2010, but later began dwindling along with the revaluation of the national currency.
Legal entities’ deposits in foreign currencies have shrunk by 2.8% over August and 10.4% since the beginning of this year to AMD 126 792 million.
The share of legal entities’ dram deposits has grown 0.6% since early January 2010 to 40.5%.
Taking into account projections for stable exchange rate of dram, likely increase of refinancing rate by the Central Bank of Armenia and the dram deposit interest rate rise, following it, we expect a gradual growth in individuals and legal entities’ dram deposits.
Mikael Verdyan, Forex Club analyst, for ARKA News Agency.
The author’s opinion may not coincide with our editorial board’s views. -0—
