YEREVAN, July 22. / ARKA /. The World Bank has commended Armenia’s Central Bank for purchasing $30 million saying in its monthly review of Armenia’s economy that the deal will allow the regulator to replenish its international reserves and alleviate the pressure on the exchange rate caused by seasonal revaluation.
According to the review, the Central Bank refrained from intervention in the foreign exchange market in May, but bought $30 million from June 8 to June 26.
The WB said in May commercial banks reserved additional liquid foreign currency funds at the Central Bank, which led to an increase in gross reserves on a monthly basis to $102.9 million.
It also revealed devaluation expectations, which was manifested in a weak desire of commercial banks to lend in local currency and in a low demand of economic entities for loans in foreign currency, the WB said. The review says also the current refinancing rate of 10.5% results in high costs of borrowed funds.
According to the Central Bank, by June 30 Armenia’s foreign exchange reserves fell to $1.546 billion from $1.599 billion a month earlier (3.3% decline). The drop was said to have come after a three-month rise from March to May when forex reserves rose form $.1491.6 billion to $1.598.7 billion.
In 2014 Armenia’s international gross reserves slashed by 33.8% or $762.3 million to $1.489.3 billion against the background of the devaluation of the Armenian dram. The drop continued into 2015. In February the reserves fell to $1.260.9 billion.
Foreign assets in freely convertible currency in June 2015 stood at $1.544.9 billion. According to the regulator, the Special Drawing Right (SDR) at the IMF at the end of the reporting period totaled $1 million. -0-
