Central Bank decided not to interfere
Support A1+!Statement of the Central Bank
After discussing the situation created as a result of the global financial/economic downturn, the Board of the Central Bank of Armenia registered that Armenia has a stable, sufficiently capitalized financial system and that it is ready to confront the future challenges of the crisis. The Board finds that in the last couple of months, the monetary policy aimed at solving financial stability issues has been productive and the emphasis is shifting towards the securing of price stability. The Central Bank is also going to focus on smoothing the sharp trends of exchange rates.
Taking into account the ongoing deterioration of trade relations in the current economic crisis and the slowing of growth of flow of capital, the CB Board decided to limit the interference of the bank in the exchange rate market and return to the floating policy.
According to evaluations of the CB based on well-known models and methods, the average balanced exchange rate for 2009 in Armenia is expected to range from 360-380 drams for one dollar.
The CB Board registered that despite the fact that deflation going on in international markets during the current global economic crisis and the slowing of internal demand contribute to inflation, the risks for exceeding the target are becoming real.
Taking into account the abovementioned, the CB Board raised the re-financing interest rate by 1 percent and fixed it at 7.75%.
