By CentralBankNews.info
Armenia’s central bank raised its benchmark refinancing rate by 175 basis points to 8.50 percent to anchor inflation expectations around its target head and head off inflationary pressures from the recent rapid depreciation of its dram currency.
The Central Bank of Armenia (CBA), which has raised its rate by a net 75 basis points this year, added that it still expects inflation to be within its allowable range by the end of a 12-month period.
On Dec. 9 CBA Governor Artur Javadian was quoted as saying the central bank had stepped up interventions in the local currency market by selling fixed amounts of U.S. dollars to Armenian banks and he expected this to end the recent sharp fluctuations in the exchange rate of the dram.
Javadian attributed a weakening of the dram on Russia’s economic woes – Armenia’s major trading partner – with the depreciation of the ruble triggering panic buying of U.S. dollars in Armenia and other ex-Soviet states.
The Armenia dram currency started depreciating in late October and the plunged sharply in late November, hitting a year-low of 490.34 to the U.S. dollar on Dec. 17. Today it was quoted at 456.17 to the dollar, down just over 11 percent for the year.