Federal Reserve’s decision to raise interest rates will not affect Armenian currency, economist says

18.12.2015 13:49
Federal Reserve’s decision to raise interest rates will not affect Armenian currency, economist says

YEREVAN, December 17. / ARKA /. The decision of the US Federal Reserve System to raise interest rate by 0.25% for the first time since 2006 will not affect the Armenian dram, economist Artak Manukyan told ARKA.

With this, the interest rates in the US are now in the range of 0.25 – 0.50 percent as compared to zero to 0.25 percent rage earlier. This is the first rate increase since 2006.

According to Manukyan, the Armenian economy "does not obey the basic market laws" which makes it ‘an island of peace." Because of this, he said, the Federal Reserve’s decision will not appreciate the greenback in Armenia.

"The depreciation of Armenian dram against the US dollar in this situation would be logical, but since our economy is poorly integrated into the global economy, and the basic economic laws do not work here, we should not expect substantial changes," he said.

He, however, added that the decision will place certain pressure on the national currencies of all countries, either directly or indirectly and that will lead to the strengthening of the dollar worldwide.
"However, no major upheavals in the world, including Russia, will happen, although some experts argue that the dollar exchange rate in Russia could reach 100 rubles, but I'm inclined to believe that the dollar will fluctuate within the range of 70-75 rubles,’ he said.

According to Manukyan, the stronger US dollar will have a negative impact also on world oil prices, bringing them even lower, ‘but oil prices can not fall endlessly.’

"There is a so-called break-even point, where the cost equals a certain level price below which oil production will simply become economically unprofitable’ he said.-0-


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