YEREVAN, March 23. /ARKA/. The past week in Armenia’s financial market saw little change, with monetary policy parameters maintained, updated banking data published, and external and fiscal risks clarified. Volatility remained limited in the foreign exchange market, with the dollar remaining stable and the euro strengthening against the dram. The agenda also included assessing inflation risks associated with the external environment, updating public debt analysis tools, disclosure issues in the debt market, and changes in the insurance segment.
1. Monetary Policy: CBA Maintains Refinancing Rate at 6.5%
On March 17, the Board of the Central Bank of Armenia left the refinancing rate unchanged at 6.5%. The Lombard repo rate remained at 8%, and the cash attraction rate remained at 5%. The confirmation of the previous monetary policy trajectory may indicate an unchanged short-term interest rate environment for banks, borrowers, and investors, as well as continued operation within the same price framework without changing the underlying resource cost benchmarks.
2. Foreign Exchange Market: Dollar Remains Near 377 AMD, Euro Strengthens
According to the Central Bank of the Russian Federation, the average market exchange rate for the dollar was 377.41 drams on March 16, and 377.5 drams on March 20. Over the same period, the euro rose from 432.96 drams to 436.31 drams, while the Russian ruble depreciated from 4.6571 drams to 4.4892 drams.
The week passed without sharp exchange rate fluctuations, but with differences in the dynamics of key currencies. This dynamic indicates the maintenance of a stable dollar base while simultaneously revaluing euro transactions, which could impact the value of foreign trade contracts, the servicing of obligations, and the settlement parameters of foreign exchange transactions.
3. Banking Sector: Loans Increased, Deposits Declined in January
According to the World Bank’s March report, which was published in the press last week, loans in the Armenian banking system increased by 1.1% in January 2026 compared to December, while deposits decreased by 0.3%. Adjusted for currency exchange rate adjustments, annual deposit growth was 19.3%, while lending grew by 24.1%. The capital adequacy ratio was 20.3%, and the non-performing loan ratio was 1.3%.
4. Inflation and External Risks: The Central Bank Assesses the Impact of the Escalation in the Middle East
Armenian Central Bank Governor Martin Galstyan stated on March 17 that the escalation in the Middle East could have an additional impact on inflation in Armenia of 1.2-1.7%. Among the main sources of influence, he cited rising oil prices, higher import costs due to the use of alternative logistics routes, and the possible substitution of food products imported from Iran. At the same time, the head of the regulator also noted another channel of influence: a slowdown in the global economy and weakening external demand.
Thus, the external component of inflation risks has increased on the market agenda this week. This may lead to continued attention not only to domestic price dynamics but also to international factors that influence import costs, demand structure, and monetary environment parameters.
5. Public Debt: A New Sustainability Assessment Model Has Been Implemented in Armenia
On March 18, Armenian Finance Minister Vahe Hovhannisyan announced the introduction of a new model for assessing public debt sustainability, while maintaining the existing analytical tools. According to him, previous approaches were based on analytical tools from the IMF and World Bank, while the new tool expands the range of possible risk sources and provides a more comprehensive assessment of risk levels.
For the financial market, this is important in terms of assessing sovereign risks, fiscal sustainability, and borrowing parameters. For banks, investors, and debt market participants, not only the size of public debt itself is important, but also the tools the government uses to assess vulnerabilities, risk sources, and debt policy directions.
In practice, this could mean updating the analytical framework underlying public debt management decisions. This could enhance the importance of the quality of sovereign analysis, the transparency of debt parameters, and the comparability of fiscal targets for domestic and external financing.
6. Debt Market Regulation: Strict Control of Disclosures in Bond Issues
At a press conference on March 17, Martin Galstyan, Governor of the Central Bank of Armenia, noted the need for strict control over disclosures by issuers when issuing bonds.
For market participants, this may be due to increased requirements for the quality of issuance documentation and the completeness of the data provided, while for investors, comparability of issue parameters and transparency of information are important when making investment decisions.
The practical significance may lie in strengthening the role of disclosure standards and issue preparation procedures. For the market as a whole, this may focus the regulator’s attention on the qualitative parameters of debt segment development.
7. Insurance: MTPL Payout Limits to Increase from April 1
Effective April 1, 2026, the maximum payout limits for MTPL insurance in Armenia will increase. The limit for property damage per victim will increase to 2.5 million drams, and the limit for damage to life and health will increase to 3.5 million drams. Total limits for a single accident are also increasing.
This may lead to insurance limits being brought into line with current pricing conditions and the adaptation of the compulsory insurance system to the changed cost structure.
Weekly Summary
The week generated a set of signals related to the maintenance of fundamental financial market parameters and the simultaneous refinement of external and fiscal benchmarks. The primary focus was on the quality of the market framework: from assessing external shocks and debt sustainability to disclosing information in the bond market and updating insurance parameters.
The key topics of the week were the maintenance of the Central Bank rate, a stable dollar exchange rate, the assessment of external inflation risks, updated approaches to public debt analysis, and changes to the compulsory motor third-party liability insurance (CMTPLI). For the market, these were primarily signals of unchanged monetary conditions and regulators’ attention to the debt and insurance segments.
This may indicate that the banking system retains the ability to support lending to the economy without deteriorating its fundamental sustainability indicators, as well as the continued role of bank financing as a key source of resources for companies and clients.
