Armenian business associations ask authorities to intervene as dram's revaluation hits export and IT companies

YEREVAN, June 24. /ARKA/. Armenian business associations called today on the Central Bank, economy and finance ministries to take urgent action to stop further revaluation of the national currency against the U.S. dollar, warning that the strengthening of the dram causes damages to business entities.

"The revaluation of the dram both in the short and long run has a huge negative impact on the Armenian economy, especially on export-oriented companies and related sectors, making sales more difficult and, at times, affecting their competitiveness in foreign markets," reads their open letter, forwarded to ARKA news agency.

The latter points out that IT companies, which have already been forced to raise the prices of their services by about 20%, are also suffering, which will inevitably weaken their competitive position in foreign markets and lead to the loss of customers.

"Armenian companies exporting wine, cognac, juices and other agricultural products, which, are sold also in the United States, Europe and Asia in addition to Russia are suffering too. In order not to lose customers, many companies sell their products at or even below production cost, which for obvious reasons cannot last long. Some companies have temporarily suspended exports, expecting a return to the exchange rate of the dram that was at the beginning of the year," the business associations say.

The letter says that the dram's revaluation at such a pace negatively impacts travel and construction companies as well as makes logistics of goods more expensive, thus affecting the prices of international haulage from Armenia. The investment in Armenia has not escaped the negative impact either, as it is necessary to make 20% more foreign currency investment to achieve the same result, which in the long run will lead to great economic losses.

"We are sure that at the beginning of the year none of the business entities in Armenia envisaged such a revaluation of the dram in their annual budgets, and many do not have enough reserves to compensate for the losses. Taking into consideration the abovementioned, we urge the Central Bank, Economy Ministry and Finance Ministry of Armenia to take urgent measures in order to stop further revaluation of the dram and restore the exchange rate to the rate close to what it was at the beginning of the year, or to introduce urgent programs of subsidizing exporters," the letter says.

The open letter is signed by Mantashyants Union of Entrepreneurs (it includes 180 medium and big businessmen), Union of Companies of Advanced Technologies (UATE, about 100 IT companies), Armenian Builders Association (over 30 companies), Export Armenia platform (over 8000 members).

The USD has lost more than 15% of its value against the Armenian dram since January 2022, when it was worth 482 drams. On June 23 the USD exchange rate was 410.82 drams.-0-