Archive for November, 2007

Foreign Exchange rates plunge again

November 25, 2007

Last week saw another fall in foreign currency exchange rates. Exchange rates have been falling steadily for several years now, however this latest incident was extremely severe. The dollar alone fell from 315 drams it traded for on Wednesday to 285 on Saturday evening, a fall of around 10% of it’s price. Amid the uncertainty, banks and exchanges around the city continue to trade with a discrepancy of 10 drams or more between the selling and buying prices for the dollar.

This latest plunge follows a decision by the Central Bank to increase the reserve rates for foreign currency by a staggering 4%. The increase from 8% to 12% both forced banks to sell foreign currency and slashed the money supply.

The central bank continuously keeps explaining the strengthening of the local currency both by rapid economic growth and increased foreign transfers. State officials apparently take advantage of public ignorance of financial matters by blatantly accepting that they are doing nothing to increase the money supply proportional to the growth of the economy. It this latest incident it is apparently doing exactly the opposite. The argument that transfers have increased has also been questioned by opposition figures.

Despite the asserted strengthening of the dram, it’s buying power has steadily declined for the past years. This is mostly due to the fact, that a large portion of the country’s import is monopolized, leading to businessmen enjoying super profits without being faced by competition that would force them to lower prices. This is also the main ground for speculation, that the Central Bank is deliberately allowing the currency to strengthen unhindered. In a talk show just before the incident, former prime minister Hrant Bagratyan talked extensively about the economic situation. He noted a recent incident in which the price of sugar, which is the monopoly of parliament member Samvel Alexanyan, was doubled overnight. The old price was restored a day afterwards, however this was followed by another plunge in foreign exchange rates.

Exporters meanwhile have been continuously complaining about the situation. The effect on the large part of the population that relies on transfers from relatives working abroad or receives salaries in a dollar equivalent has also been harsh.

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Ter-Petrosyan’s second meeting takes place

November 19, 2007

Last Friday saw the opposition’s meeting take place as scheduled. This has so far been Levon Ter-Petrosyan’s second meeting after his return to active politics. So far the only claimed number of people attending has been Haykakan Zhamanak’s 80 – 85 thousand. This however is most probably grossly overestimated. The paper, actively supporting Mr. Ter-Petrosyan and his team, had cited 30-35 thousand as the number of people attending the first meeting, however eyewitnesses suggest that the actual numbers were not substantially different, with this Friday’s meeting attracting only slightly more people.

It is nevertheless noteworthy, that the number of people attending the second meeting was not less than the first one. It had been suggested, that Mr. Ter-Petrosyan’s first appearance would draw a substantial crowd because of the sensation – it has been his first public speech in ten years.

With electronic media largely unavailable, except for several radio stations and regional TV stations, the team relied on leaflets and posters to get the message across. As was the case before the previous meeting, problems arose with this again. Some young people were detained by police as they were dispersing leaflets. Narek Galstyan, the leader of the youth wing of one of the parties supporting Ter-Petrosyan, was beaten by unidentified people, after first being detained by police.

Also noteworthy was the speech of Khachatur Sukiasyan, a businessman and legislator who’s businesses fell under immediate fire from tax authorities after declaring support for Mr. Ter-Petrosyan. It has already been argued, that Mr. Sukiasyan is destined to become Armenia’s Khodorkovsky. This is however a likely overstatement since public support for him appears to be high and the authorities will probably have few options other than applying moderate pressure.

In his speech Mr. Ter-Petrosyan talked extensively about the energy crisis of the early nineties. He vaguely apologized, but only after distending himself from almost all of the blame, citing the Nagorno-Karabakh war as the main reason behind the crisis. Also, in an outright populist move, he apologized from bringing the current authorities to power.

Mr. Ter-Petrosyan also declared that none of the figures of his administration are aiming for government posts. It was however unclear if he was expressing the positions of those once around him, or it is his decision to keep them away. On a final note, destined to resound with many, he read out a list of opposition leaders and declared that if all of them unite around him, he will, if elected, promise to step down in three years, leaving the stage open for them. Since apart from others the list contained Vazgen Manukyan’s name, it is highly unlikely that Mr. Ter-Petrosyan will be forced to make the promise, since Mr. Manukyan is probably the last man to unite around him.