YEREVAN, September 8. /ARKA/. . ' We  see risks on both sides,' Jihad Azour’, Head of Middle East and Central Asia Department at the International Monetary Fund (IMF), said in an exclusive interview with ARKA news agency in response to a question about possible scenarios for the behavior of the Armenian currency.

Earlier, the Central Bank of Armenia said it did not see the prerequisites for the devaluation of the dram, but considers the scenarios of both strengthening and weakening of the exchange rate as possible

'The dram appreciated significantly against the currencies of Armenia’s key trading partners since the start of the war in Ukraine, which is largely explained by the strong capital inflows,' Azour said.

He said on the one side, a potential reversal of these inflows could put downward pressure on the dram and on the other side, should the inflow of capital continue to be strong further appreciation of the dram is also likely.

In either case, it is important for the right policies to be in place so that the economy and the financial system are robust and temporary exchange rate movements do not have a significant impact on them, he said. 

According to EDB analysts, the Armenian dram has shown a steady appreciation against the currencies of trading partner countries since the beginning of Q2 2022:  according to the results of July of this year, compared to the beginning of 2022, the Armenian dram has strengthened in annual terms by 19.8% against dollar, by 21.7% against euro, and by 32.4%.  against Russian ruble. 

Fitch Ratings expects moderate AMD depreciation in 2023-2024, but to a higher level than it was prior to the Ukraine conflict, while S&P expects the Armenian AMD to start depreciating as the current account deficit widens and money transfers slow. -0-