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. Last Updated: 07/27/2016

Banker: Armenia Economy To Stay Stable Despite Russia

YEREVAN, Armenia -- Armenia has been hit hard by Russia's economic crisis, but there is no danger of a run on the national currency or of major instability, the chairman of the central bank said Tuesday.

"We've been able to guarantee financial stability. There is practically no inflation and the dram is floating in an acceptable range," Tigran Sargsyan said in an interview.

Sargsyan said Russia's troubles had resulted in a sharp drop in traditional exports such as brandies from the Caucasus country of 3.8 million to its giant northern partner.

He said an equally negative effect was a steep fall in transfers of hard currency from ethnic Armenians working in Russia to family members in Armenia, worth an estimated $200 million a year before the crisis began.

"The transfers which we had been getting had helped to cover our current account deficit," Sargsyan said. "The sharp drop in the value of the ruble to the dollar resulted in a fall in transfers."

The dram currency has slid slightly since the Russian crisis began last August, to around 535 drams per dollar from about 505 drams.

Sargsyan said the central bank was essentially letting the dram float. "We are intervening only to control liquidity, also to stabilize the seasonal fluctuations in the dram, but in no case are we doing this in such a way that reserves will be reduced," he said.

Current central bank hard currency reserves are $313 million, down only slightly from a peak of $335 million last year and still $6 million more than projected at the start of the year, he noted.

Sargsyan declined to predict at what exchange rate the dram would trade at the end of 1999. Inflation is forecast at about 10 percent for 1999, after a 1.3 percent fall in prices in 1998.