Armenia: Forex market review, June 25-29

02.07.2012 14:21
Armenia: Forex market review, June 25-29

YEREVAN, July 2. /ARKA/. Last week the cost of USD at NASDAQ OMX Armenia stock exchange dropped by 0.14% to 418.61 drams as overall weekly trading amounted to $14.10 million, a 5.70% upward over the previous week. The average selling rate of cash greenback fell by 0.21%, to 419.86 drams on June 30, Saturday.

We think that the drop of USD is explained by Armenian Central Bank’s intervention to support the national currency as well as slip of the American currency at FOREX global market as the sentiments of the market members improved.

Next week the USD may continue consolidating.

Some pressure upon the USD may be caused by positive results of the EU summit. The U.S. dollar will also shrink as population and business reduce the volume of USD purchase. Indeed, according to the Armenian Central Bank’s review, a total of -3.74 million dollars were sold at intra-banking exchange market by commercial banks last week, against 12.946 million dollars from a week earlier.

Nevertheless, there is still a demand for the foreign currency, that’s why the next week it is possible that we will see relatively stable rate of cash dollar.

As a result an average selling rate of USD cash will be within 416 – 421 drams this week.

The euro exchange rate in Armenia last week was determined by events at FOREX global currency market, where EUR/USD pair rose by 0.75% to 1.2661, as well as USD dynamics against the Armenian dram.

At the beginning of the last week the European currency was dropping as a result of negative expectations from the EU summit leaders. Macroeconomic statistics from the euro zone didn’t give an optimism either. Indeed, the indicator of consumer confidence in the region reported -19,8 in June against -19,6 in May.

However, on June 29, Friday, throughout the Asian trading session euro started growing due to the statement released by the Chairman of European Council Van Rompuy. He said that the euro zone will open European Stabilization Mechanism (ESM) and European Financial Stability Fund (EFSF) for the states which are not listed as the program participants. This was positive news for the market members who were encouraged to actively purchase risky assets.

As a result, the average selling rate of euro cash in Armenia last week jumped by 0,52% to 532.89 drams.

This week the euro dynamics in the world, and accordingly in Armenia, will depend on economic data from FOREX market. Of American news we should focus on the purchasing managers’ index in industry and service sphere issued by Institute of Supply Management, as well as employment rate by ADP agency and a number of new vacancies in non-agricultural sector in June. Data from labor market is expected to be positive, and it can support the American currency.

Of European news we should highlight another meeting of ECB on interest rate, scheduled for Thursday, July 5. The European regulator is expected to downgrade the rate by 0.25% to 0.75%, what will also pressure the European currency. However, if the economic data is non-satisfactory, and the European regulator doesn’t change the interest rate, euro may continue growing. The expected euro fluctuation range at FOREX market will be 1.2400-1.2850 this week. The average selling rate of euro cash in Armenia this week may most likely be within 520 – 545 drams.

The average selling rate of the Russian ruble advanced by 1.64% to 13.01 drams last week due to increase in the ruble’s value against USD touched off by uphill 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. Positive results from the EU summit may support the ruble quotes at the beginning of this week. However, if American statistics, particularly, from the labor market is better than projected, ruble may fall.

The average selling rate of the cash ruble in Armenia over the next five trading days is likely to be in the range of 12.85 – 13.20 drams.

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