By Hrach Melkumian
The Armenian Central Bank dismissed on Wednesday former Prime Minister Hrant Bagratian’s allegations that its heavy reliance on the weakening U.S. dollar has caused the country huge financial losses.
In an interview with RFE/RL on Monday, Bagratian said the authorities should have converted most of Armenia’s hard currency reserves to euros and promoted the single European currency that has substantially strengthened against the dollar over the past year.
“Those accusations are baseless because the Central Bank has changed the structure of its portfolio,” Tigran Sarkisian, the Central Bank chairman, told reporters. “We have drastically increased the share of the euro and the [British] pound sterling. We have a fairly diversified portfolio.”
Sarkisian said 56 percent of Armenia’s external reserves worth roughly $500 million are currently kept in dollars, down from 80 percent reported a year ago. The euro’s and the pound’s share in those assets managed by the Central Bank now stands at 24 percent and 20 percent respectively, he added.
Bagratian, known for his ardent support for liberal economics, also said that the Central Bank should have made sure that the euro is more popular with the Armenian business community and ordinary people, arguing that the EU is Armenia’s number one trading partner. But that is easier said than done, according to Sarkisian.
“Armenia remains a dollar-based country,” he said. “Although deals carried out in euros drastically increased in 2004, they are still insignificant compared to dollar deals. Our citizens mainly keep their savings in dollars and 95 percent of cash remittances [from Armenians living abroad] are dollar remittances. We can not fail to reckon with that.”
Besides, the Central Bank chief argued, the dollar remains the sole “global currency” despite its present volatility.