Economist: Armenia's preparation for possible fluctuations at forex market is at high level, but there are also vulnerable categories of people - exclusive interview

13.03.2020 10:34
Economist: Armenia's preparation for possible fluctuations at forex market is at high level, but there are also vulnerable categories of people - exclusive interview

YEREVAN, March 13. /ARKA/. Armenia's preparation for possible fluctuations at forex market is at a high level, but there are also vulnerable categories of people, Sevak Hovhannisyan, a member of the board of the Economy and Values center, said in an interview with ARKA News Agency.

The Russian ruble has dropped steeply against the US dollar and the European currency amid collapse in oil prices after the failed negotiations over reduction of oil extraction. The dollar was traded at 75 rubles at Forex, and the Euro at more than 85 rubles. Both foreign currencies were at these levels last in 2016.

"When the ruble depreciates, if we receive transfers from Russia, their purchasing power drops and, accordingly, the part of the Armenian population that lives on transfers will have their income reduced and their solvency subsided," Hovhannisyan said.

He said if the level of income from the sale of oil is reduced, this will lead to a reduction in public spending, also in the construction sector. And this is an area that ensures high employment to labor migrants.

According to him, as a result, the depreciation will lead to a decrease in purchasing power, which will also affect Armenia by driving the living standards of this segment of the population down. In addition, the main part of the final products of Armenia, with the exception of mining, is sold at the Russian market and in this regard, export problems may arise, just as in 2008-2009, when exporters received less income due to fluctuations in the exchange rate.

Hovhannisyan said this can affect the entire price chain - up to the farmer, however, everything will depend on the scale of the influence of fluctuations at the Russian market. "Signs of influence will become visible soon enough, because the influence of oil prices and the ruble exchange rate quickly affects these two areas," Hovhannisyan said.

However, as the expert notes, a lot will depend on how Russia and Armenia will manage to regulate the foreign exchange market. "For example, the Central Bank of Armenia has significantly improved its reserves over the past two years, and from this point of view it can be said that it is at a higher level of preparation," Hovhannisyan said.–0--


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