YEREVAN, August 31. /ARКА/. Armenia’s financial agenda last week was determined by the Central Bank’s inflation signals and monetary policy transmission, the state of international reserves, and the state’s debt parameters. S&P Global Ratings assessments provided an additional external benchmark. Domestic market changes in banking regulation and asset structure continued, and the capital market was replenished with new corporate bonds.
1. Monetary Policy: Central Bank Records Acceleration of Inflationary Pressure
In its report on the implementation of its monetary policy program for the period from Q3 2025 to Q2 2026, published on August 28, the Central Bank of Armenia reported that annual inflation accelerated from 3.9% in June 2025 to 5.1% in June 2026, while core inflation accelerated from 3.1% to 4.9%. The regulator cited external price pressure, rising local food prices, and a slight expansion of domestic demand as key factors.
For the financial market, these data may determine the current inflationary environment within which the banking system operates. With the Central Bank’s refinancing rate maintained at 6.5%, the key parameters remain the cost of resources, lending dynamics, and actual changes in consumer prices.
2. Bank rates: the transmission of Central Bank decisions remains gradual
In the same program, the Central Bank noted that interest rates in the banking system are adjusting slowly following the reduction in the monetary policy rate and short-term market rates. At the same time, demand for lending remained high, particularly in the consumer loan segment.
At the same time, mortgage lending growth slowed somewhat amid a significant reduction in the income tax refund program, but lending volumes continued to increase.
For banks, this may mean a persistent time lag between changes in the cost of short-term monetary resources and rates on credit and deposit products. The transmission of monetary decisions continues to be channeled through the structure of credit demand, the maturity of bank liabilities, and the cost of funding.
3. Foreign exchange market: the dram strengthened against the dollar at the end of the week.
The average market exchange rate for the US dollar on August 24 was 365.38 drams, and by the end of August 28, it had fallen to 364.32 drams per dollar. The euro exchange rate fell from 426.22 drams to 424.36 drams, and the ruble exchange rate fell from 4.3633 drams to 4.2392 drams.
For banks and companies dealing with import and foreign exchange transactions, current dynamics may impact the revaluation of foreign exchange positions, the cost of external payments, and settlements under foreign currency contracts.
4. International Reserves: Reach a Record High of $6.19 Billion
Armenia’s gross international reserves amounted to $6.1886 billion as of the end of July 2026, up from $5.8962 billion the previous month, according to Central Bank data. This represents a 4.96% increase over the month.
For the foreign exchange market, the level of reserves remains an important indicator of the economy’s ability to service external obligations and cover imports.
5. Sovereign Rating: S&P Maintains Positive Outlook on Armenia
S&P Global Ratings affirmed the long-term and short-term sovereign ratings of the Republic of Armenia at ‘BB-/B’, maintaining a positive outlook. Among the factors supporting the rating, the agency highlighted a predictable macroeconomic policy framework, economic growth prospects, and a manageable level of public debt.
Maintaining the rating and outlook may anchor the current external assessment of Armenia’s creditworthiness. 6. Public Debt: S&P and the Ministry of Finance assess its level as sustainable and manageable
S&P Global Ratings estimates that Armenia’s public debt, net of liquid assets, will remain broadly stable over the medium term at just above 40% of GDP. The agency cites the state’s ability to maintain revenue growth amid structural spending on defense, healthcare, and infrastructure as the key fiscal factors.
In an interview with Shant TV last week, Finance Minister Vahe Hovhannisyan stated that the public debt-to-GDP ratio by the end of 2025 was 47.2%, calling it manageable.
A comparison of the rating agency’s assessment and the Ministry of Finance’s position may indicate that the debt burden remains within current fiscal parameters. 7. Bank Investments: Portfolio Decreases to AMD 1.93 Trillion
The total investment portfolio of Armenian commercial banks amounted to AMD 1.93 trillion in June, down 9.48% year-to-date and 12.68% in the second quarter. The volume of bank investments directly in securities amounted to AMD 1.92 trillion, or 13.9% of the total assets of the banking system.
The decrease in the overall portfolio in the second quarter may reflect a change in the distribution of bank assets between securities, lending, and other financial instruments.
8. Banking Regulation: Account Statements Will Become Free
The Board of the Central Bank amended the rules of business conduct for financial institutions, according to which individuals will be able to receive free electronic statements from commercial banks about their accounts, balances, and the presence or absence of liabilities to the bank. A paper certificate must be provided free of charge at least once per calendar year.
For banks, the changes may mean unification of the minimum standard for providing such information, and for clients, a reduction in the costs of obtaining documents required for lending, confirming financial status, and interacting with other organizations.
9. Banking Sector: S&P notes high capitalization and profitability
As part of its analysis of Armenia’s sovereign creditworthiness, S&P Global Ratings characterized the country’s banking sector as well capitalized and highly profitable. The agency attributes the current state of the system to high levels of net interest income and economic activity.
For the banking system, the combination of sufficient capitalization and profitability may form the basis for ongoing financial stability.
10. Capital Markets: New Corporate Bonds Listed
ML FASHION bonds with a total nominal value of AMD 500 million have been listed on the Armenia Securities Exchange and included in the Bbond secondary list. The issue includes 5,000 bonds with a par value of 100,000 drams, a coupon rate of 13% per annum, and a maturity of 36 months. Cube Invest acted as the arranger of the placement.
During the week, Converse Bank also placed 2 billion drams worth of dram-denominated bonds with a coupon yield of 9.5%. Concurrently, the bank continued to place a $5 million dollar bond issue at a rate of 5%.
The entry of a corporate issuer from the real sector and new bank issues may expand the supply of debt instruments on the Armenian market.
Weekly Results
The week confirmed the continued stability of the Armenian financial market amid the ongoing adjustment of monetary and financial conditions. Macroeconomic stability, the quality of banking assets, fiscal sustainability, and the development of domestic funding sources remain key market benchmarks.
