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Armenia devalues national currency

03 March 2009 14:32 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. Armenia’s central bank said on Tuesday it will float the country’s dram currency due to the crisis and raise refinancing rate by 100 basis points to 7.75 percent, reuters reported.
In a statement, Armeniaâ€™s central bank said due to financial and economic crisis, worsening terms of trade and slowing capital inflows, it made a decision to limit currency interventions and return to free float policy.
The central bank said it expects the dram’s exchange rate to average 360-380 to the dollar versus 306 to the dollar on March 2.
Armenia has seen GDP growth halve to 7.2 percent in the first months of 2008 from 13.6 percent in the same period the year before.
Armenia has recently got a $500 million loan pledge from Moscow and a $540 million loan from the IMF.
Russian firms control a significant chunk of the Armenian economy, and Armenia is likely to feel the impact of its much larger neighbor sliding into its first recession in a decade.
A considerable number of Armenians work in Russia and send money home to families.
Falling exports and a slowdown in remittances fuelled economic recession in the country.