YEREVAN, August 2. /ARKA/. Depreciation of Armenian national currency, the dram, will have a positive impact on national producers, making their goods cheaper and more competitive in foreign markets, Hovak Hovakimyan, CEO of Freedom Broker Armenia, said to ARKA news agency.
“This will generate more revenue in drams, and respectively more taxes paid,” he said.
Hovak Hovakimyan noted also that the depreciation of the dram will help keep a large number of mainly Russian nationals who relocated to Armenia after the start of the Ukraini8an war.
“Most of them receive their salaries in either hard currencies or Russian rubles, while their spending is in drams. If the exchange rate drops, their real disposable income in drams will also rise. Living in Armenia will be cheaper, and the opportunity to spend will be greater,” he explained.
According to Hovakimyan, the reduction of the refinancing rate by the central bank together with the systematic devaluation will be a great help, first of all, for the industry, because on the one hand their goods will be more competitive, and on the other hand, financing will be cheaper.
The Central Bank of Armenia cut the refinancing rate by 0.25 p.p. at its August 1 meeting, setting it at 10.25%. This is the second cut of the refinancing rate since the beginning of the year. The first one was on June 13, when the regulator cut it by 0.25 p.p. setting it at 10.5%.
“However, we believe that the share of both deposits and loans in US dollars is still quite high, which leads to additional currency risks. We believe that a policy should be pursued to increase the AMD money supply in the economy, especially against the background of increasing demand of investment funds for Armenian government bonds in local currency,” he emphasized. -0-
