No dollars in Armenia

It's been speculated for a few years now that Armenia's currency has been artificially manipulated to keep it strong against the dollar (300 drams per dollar vs. the nearly 600 a few years ago). Oftentimes there has been no logical explanation, and even as other currencies would fluctuate against the dollar, the dram just stood firm, or gained strength. The reason for the conspiracy theories, besides the inexplicable rise of the dram, is that many of the most powerful men in Armenia are big importers, and the strong dram has benefitted them a great deal. Meanwhile, those who actually want to help Armenia by creating jobs, manufacturing, exports, etc have been suffering huge losses, and some have closed up shop. In the past couple of days, a massive shortage of dollars has made it clear, that something is fishy behind the exchange rate...

Buying U.S. dollars was all but impossible in Yerevan on Friday in a further sign that the exchange rate of Armenia’s national currency, the dram, is no longer market-based.

Unlike many other currencies, the dram has not depreciated against the dollar since the onset of the global financial crisis late last year. The government and the Central Bank of Armenia (CBA) have since been facing allegations by critics that they are using the country’s hard currency reserves to artificially bolster the dram.

The authorities deny any heavy intervention in the currency market. Many Armenians seem unconvinced by these assurances and anxious to convert their dram
savings into dollars. Lines of dollar buyers could be seen outside some Armenian banks and currency exchange shops on Friday. “Dollars are not for sale in any currency shop,” one woman told RFE/RL.

“Everyone wants dollars, but we don’t sell them,” complained one currency trader at a food supermarket in downtown Yerevan. “It’s a panic. I have only $125 in cash right now. I used to have $20,000 at this time of the day.” -RFE/RL