raindrops and drams and subways...
It's raining nicely outside. Not too strong, unlike the random freak storms we've had a few times this month. This has dropped the temperature down a great deal, and is a fantastic respite from the heat we've been having. August usually is HOT! Let's see what the weather has in store for us this next week, as the Pan-Armenian games start tomorrow.
So I was reading Harut Sassounian's column this week about the dollar-dram exchange rate. I've written about it before. His main point is that the exchange rate, which has seen the dollar drop by about 40% in the last couple of years, has not been manipulated. Now I know Armenians love their conspiracy theories, but I agree, for the most part, there are solid reasons for the drop in the dollar, and no need to speculate about the cause. And while I agree that the markets for the most part need to decide these things, I don't think it would hurt at all for the Central Bank in Armenia to print some extra drams and finance some public works. This will mitigate the harshness of the exchange rate a little for the many Armenians here depending on remittances, and for exporters who's products are now too expensive to sell abroad. It will of course also provide the valuable service of whatever is built with the money.
One of my favorite causes would be the extension/completion of the metro system. We currently have basically one line with a dozen stops, and it is really not helpful for the most part in getting from point A to point B. The odds that you are already along the metro, and that your destination is as well, is very low. So, very few people use the beautiful, inexpensive metro we have, while traffic is exploding on the streets. There are plans on the books to extend the current one line to Davitashen, and add two brand new lines... so I say, what better time than the present? Spend some of these drams which have become so valuable, alleviate some of the traffic, and mitigate some of the drastic exchange rate drop in the dollar, and I think we'll all come out ahead.
So I was reading Harut Sassounian's column this week about the dollar-dram exchange rate. I've written about it before. His main point is that the exchange rate, which has seen the dollar drop by about 40% in the last couple of years, has not been manipulated. Now I know Armenians love their conspiracy theories, but I agree, for the most part, there are solid reasons for the drop in the dollar, and no need to speculate about the cause. And while I agree that the markets for the most part need to decide these things, I don't think it would hurt at all for the Central Bank in Armenia to print some extra drams and finance some public works. This will mitigate the harshness of the exchange rate a little for the many Armenians here depending on remittances, and for exporters who's products are now too expensive to sell abroad. It will of course also provide the valuable service of whatever is built with the money.
One of my favorite causes would be the extension/completion of the metro system. We currently have basically one line with a dozen stops, and it is really not helpful for the most part in getting from point A to point B. The odds that you are already along the metro, and that your destination is as well, is very low. So, very few people use the beautiful, inexpensive metro we have, while traffic is exploding on the streets. There are plans on the books to extend the current one line to Davitashen, and add two brand new lines... so I say, what better time than the present? Spend some of these drams which have become so valuable, alleviate some of the traffic, and mitigate some of the drastic exchange rate drop in the dollar, and I think we'll all come out ahead.
posted by Raffi K. at 10:55 AM
3 Comments:
Printing money will increase the inflation. Assuming that the fall of the USD is due to its increased supply the solution is to decrease the supply of the dollar. i.e. government stops borrowing dollar. I am sure with a smart strategy it will be possible to turn the 1.2bn USD cash inflow from abroad into an advantage. And this can be done with very minimal interferenace. Here is where the controversy comes that is , the CB of Armenia is not interested in devaluing the Dram i.e it downt want to hurt the oligarchs who make millions from importing. As a result teh ordinary falks get lumas(pennies) from their relatives hard earned USD. The prices of most of the products in Armenia are not much different from the prices in London - the 5th most expensive city in the world.
It amazes me how many comments (especially anonymous) start out making very good sense, then end with a statement that only a lunatic would assert. I often don't publish them, because I don't like to see statements like "Yerevan is the fifth most expensive city in the world" being made on my website, and don't often feel it's worth my time to counter such statements... but come on, what on EARTH is this statement about?!?!?
In Yerevan, just about anywhere:
-A half liter beer costs about $1
-A taxi ride costs $2
-A Russian jeep costs $7,000
-A light bulb costs 20 cents
And the list goes on. Now if you're talking about items imported from the West, well you can hardly expect a flatscreen TV to cost much less in Yerevan than in any other city (whether London or Mexico City or Lima).
How would the the new subway go over the gorge to davtashen ? I don't think the new bridge can support it no ? What else is being discussed, like are they planning to extend it to monument via komitas ?
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