YEREVAN, August 21, /ARKA/. Armenia’s national currency, the dram, was listed by Bloomberg as one of ten national currencies that may depreciate after China’s decision to weaken the yuan on Aug. 11.
Bloomberg says a 22 percent plunge in the tenge after Kazakhstan abandoned control of its exchange rate revealed a sense of urgency among policy makers: they had tried a managed depreciation just a day earlier.
‘The escalation signaled to investors that it has become too costly for developing nations to defend their currencies. Vietnam also devalued the dong, while freely traded currencies such the South African rand and Turkey’s lira extended losses. That added to the woes of emerging markets already reeling from a looming increase in U.S. interest rates and weakness in oil prices.
Some, like the countries of the former Soviet Union, face an additional problem: the ruble’s continued weakness puts them in an unfavorable position in their trade with Russia,’ according to Bloomberg.
It says Turkmenistan, the oil-exporting nation with close economic ties to Russia devalued its currency by 19 percent in January. Stockholm-based SEB AB forecasts a further weakening of as much as 20 percent in the next six months.
Tajikistan has close ties with Kazakhstan, which accounts for about 11 percent of trade, and SEB expects a depreciation of 10 to 20 percent. Armenia’s dram has lost 15 percent in the past 12 months, compared with a 46 percent drop in the ruble. A quarter of the country’s trade is with Russia.
The weaker tenge will put pressure on the Kyrgyz som because of this country’s ties to Kazakhstan, according to BMI Research.-0-
