Armenia: Forex market review, June 18-22

25.06.2012 13:35
Armenia: Forex market review, June 18-22

YEREVAN, June 25. /ARKA/. Last week the cost of USD at NASDAQ OMX Armenia stock exchange climbed by 1.05% to 419.18 drams as overall weekly trading amounted to $13.34 million, a 11.07% drop over the previous week. The average selling rate of cash greenback rose by 0.94% to 420.73 drams on June 23, Saturday.

Over the last trading week an average weighted rate of the U.S. currency continued growing thus reaching the new recording point since late June of 2006 to 419.50 drams. This was prompted by uncertain situation around the euro zone that shored up continuing demand of the investors and population for the U.S. dollar. Strong USD at FOREX market is also raising demand in Armenia for this currency.
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The U.S. dollar has all the chances for further growing as demand for this currency in the world remains stable. Thus, the USD rate in Armenia may fetch 422.50 drams per $1 at NASDAQ OMX Armenia this week. However, USD rise will be hindered if the regulator enters trades to support the national currency from sharper depreciation.

American dollar’s climb will be also fostered due to the increased volume of USD purchases by the population and business. Indeed, according to the Armenian Central Bank’s review, a total of 12.946 million dollars were sold at intra-banking exchange market by commercial banks last week, which was 18.94% more from the week earlier.
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As a result an average selling rate of USD cash will be within 417 – 423 drams this week.
The euro exchange rate in Armenia last week was determined by events at FOREX global currency market, where EUR/USD pair fell by 0.59% to 1.2565, as well as USD dynamics against the Armenian dram.

Early last week euro was growing after the results of the parliamentary elections in Greece became clear and New Democracy party got landslide victory.

However, euro quotes stopped rising as concerns around formation of a new strong coalition government in Greece aroused. Yield of 10-year-old government bonds reached 7.0%, that is supposed to be a critical benchmark.

The principal currency pair was stable as the U.S. Federal Reserve was expected to roll out some additional measures for softening monetary and credit policy. However, on June 20, Wednesday, the market members were disappointed by press conference of U.S. Federal Reserve Chairman Mr. Bernanke and the decision to extend Operation Twist program till the end of 2012. Already on June 21, next day, the European currency started losing its positions till the end of the week.

Unsatisfactory economic data showing global economic growth slowdown have also pressed the principal currency pair. The concerns of the investors were touched off by weak economic data from the euro zone and China, as well as news from Federal Reserve of Philadelphia on business activity and another weak report on the U.S. labor market.

In Armenia an average selling rate of euro cash , on the contrary, climbed by 0.31% to 530.14 drams last week due to fall of AMD against USD.

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Euro quotes will remain vulnerable because of the uncertain situation in the euro zone and the upcoming EU summit in Brussels, June 28-29. Euro may fall even sharper if the EU leaders will not be able to give hope to international investors to finding solution for debt crisis in the euro zone in the long-term perspective.

Euro dynamics will also depend on the news in the euro zone and the United States. Of the American news we should focus on the final data on the first-quarter GDP of the country, numbers from the housing market in May, consumer confidence indicator as well as business activity index Chicago PMI in June. Of European news it is important to highlight publication of preliminary data on consumer prices index in Germany and the euro zone in June. The expected moderately positive statistics from overseas and weak data from the euro zone may pressure euro quotes.

The expected euro fluctuation range at FOREX market will be 1.2400-1.2750 this week. The average selling rate of euro cash in Armenia this week may most likely be within 523 - 540 drams.

The average selling rate of the Russian ruble dropped by 1.61% % to 12.80 drams last week due to decrease in the ruble’s value against USD touched off by fall in oil prices.

Ruble rates against USD and Armenian dram will depend on macroeconomic data from the United States, news from the euro zone, and oil prices dynamics. Nevertheless, ruble quotes will remain vulnerable as the uncertain situation around the euro zone is not put into end. If the situation in this region is getting worse, ruble may fall sharper.

However, despite forecasts, the economic statistics from overseas is not very optimistic and news from the euro zone is satisfactory, ruble may grow.

The average selling rate of the cash ruble in Armenia over the next five trading days is likely to be in the range of 12.70 – 12.90 drams.

Mikael Verdyan, analyst at GK FOREX CLUB, specially for ARKA
The opinion of the author may not necessarily reflect the opinion of ARKA.—0


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