Market stabilizing amid wait-and-see attitude – Tatul Manaseryan
In an interview with Tert.am, Founder of the Alternative research center, Doctor of Economy, Prof. Tatul Manaseryan commented on certain transactions postponed because of exchange fluctuations.
According to him, experienced economic entities must be able to continue and make calculations amid exchange fluctuations.
As regards commercial banks, which are reducing consumer lending, he said the uncertain situation is a key factor.
“Our market is under numerous influences, and I would not say the aforementioned factors are the only ones accounting for the business community’s wait-and-see approach. I can say that exchange fluctuations have always taken place, and we should be ready for any scenario. In any situation, both importers and producers can benefit from favorable conditions. I do not see any reasons for panic. Those showing a wait-and-see approach are not experienced businessmen. Experienced businessmen are well aware of what they should do amid fluctuations.”
According to Mr Manaseryan, consumers’ situation is not so favorable. A declining demand is number one obstacle. In contrast to the situation in other countries, he does not see salary adjustment in Armenia. The government is only trying to raise the minimum wages and pensions.
Secondly, Armenia’s banking system should try self-insurance, and commercial banks are one of the mechanisms. And the current problems are the result of this uncertain situation.
“Specifically, what is going to happen to the exchange rate and who is to pay for that? It will affect the consumer market as well. Aggregate demand is declining, with resulting decline in the purchasing power. With consumer lending reduced, the market will encounter problems,” Mr Manaseryan said.
As to how long such situations may last, he said:
“If we see the exchange rates, they do not show wide margins. Serious exchange fluctuations last November and December were accompanied by wide margins. At present, they are 1, 2 or 3 drams. This means that the market is stabilizing.”
The Central Bank of Armenia (CBA) has raised the financing rate to prevent AMD depreciation, which is causing a rise in loan interest rates. Side effects should be expected as well, he added.
Armenia is trying to stabilize its national currency.
“USD and Euro exchange fluctuations are most important. Overvalued dollar is an impediment to the US economic development as well. The European Union is taking steps to stabilize its currency as well,” Mr Manaseryan said.
The exchange fluctuations will influence Armenia’s small economy. If the country focuses on its own production and on meeting domestic demand, it will be more independent of shocks on foreign markets and control prices.
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