Update--an article from Radio Free Europe/Radio Liberty

Radio Free Europe/Radio Liberty (RFE/RL)
March 3, 2009


Armenian Currency Free-Falls As Central Bank Ends Intervention

by Charles Recknagel


Armenia's national currency, the dram, has gone into free fall after
the Central Bank stopped intervening to support it.

In the space of a few hours on March 3, the dram went from 305 to the
dollar to as low as 400 to the dollar, a loss of up to 30 percent of
the currency's value.

Until recently, many Armenians felt relatively untouched by the
economic crisis sweeping the world, largely because much of the
country's income is supplied by remittances from the Armenian diaspora
abroad.

But as the economic situation in Russia has worsened, remittances from
that direction have steadily dried up. And the same thing, at a slower
rate, has been happening with remittances of dollars from the United
States.

Now, the decline of remittances has made its impact fully felt.

The Central Bank, which for years has relied upon remittances to fund
its policy of supporting the dram against the dollar, decided it could
no longer sustain that burden.

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