Super Dram

Those of you visiting Armenia this summer will notice that the Dram has appreciated a great deal against the US dollar (and even the Euro). The dram has gained more than 30 percent in value against the dollar in the last two and a half years - much of it this past year. It now stands at 418 drams to the dollar. Since many people depend on the dollars sent to them by relatives from the US and Russia, their purchasing power has dropped a great deal. Companies producing exports from Armenia are suffering as well, since their products now bring in much less money when they convert their dollar sales - and Armenia's biggest manufacturing company is threatening to move abroad. So who profits? Simply importers and people whos entire salaries are denominated in drams. The largest importers of course are government officials - usually holding monopolies on importing certain items (fuel, sugar, etc). Imports to Armenia have surged 13% already and exports dropped 8%. A country concerned with encouraging exports would of course intervene to weaken their currency. China for years fought the increase of value of its currency, only caving in to massive international pressure to do so this year. The Armenian Central Bank, which sets the dram’s exchange rate, argues that its main mission is to suppress inflation, rather than protect local exporters and jobs... perhaps they need to be informed that their mission is wider than that, and that jobs and exports are as important as inflation?