Armenian CB publishes currency market analysis

YEREVAN, March 11. /ARKA/. The Central Bank of Armenia (CBA) has published the results of an analysis of Armenia’s currency market, which show a USD downfall on November 23-25, 2007.
 
The CBA press service reports that the downfall recorded in Armenia on November 23-25 (days off) resulted from speculations by some banks and exchange offices, as well as from large-scale cash transactions effected by a number of businessmen. The report says that some violations were revealed, which forced the CBA to apply sanctions against the violator banks and exchange offices.

Specifically, during the period under review, the lowest purchase rate was set by the Prometey Bank – AMD 280/$1. The too low exchange rate set by the bank’s branch on Tigran Mets avenue caused the citizens wishing to exchange US dollars at a higher exchange rate to rush to the nearby Ardshininvestbank office, which resulted in a long queue there. In its turn, the Ardshinivestbank took advantage of the situation and purchased US dollars at an exchange rate of 291 AMD/$1. One more bank, HSBC Bank Armenia, which is located at a distance from the Ardshininvestbank, set an exchange rate of 300 AMD/$1, which formed a much longer queue.

The CBA conducted inspections at the Prometey Bank, focusing attention on currency purchase and sale transactions. The inspections revealed violations of relevant regulations, and the CBA applied sanctions against the bank. Specifically, the work of one of the branches of Prometey Bank was suspended – the branch was most active in the purchase and sale of currency.

As regards the bank’s other branches, Prometey Bank was ordered to strengthen control over their activities. In case they failed to properly execute the bank’s instructions, their activities were to be suspended within two months. The CBA also instructed the Prometey Bank to revise its activities and present a new program, which will not envisage a policy of making currency purchase and sale one of the priorities, which will reduce the share of incomes from these operations in the bank’s total incomes.

The CBA also found that banks, particularly the Armeconombank and the Araratbank, as well as related clients (individuals) effected exchange transactions with US dollars. Some of the persons are known to have been workers of exchange offices. The persons in question were effecting repeated transactions on November 23-25. The CBA provided information on them to Armenia’s law-enforcement bodies.

On November 19-23, 2007, the CBA also recorded large-scale monetization transactions with US dollars – up to $10mln. The information at the CBA’s disposal does not make it possible to know what happened with $3mln later.

The CBA reports that organizations carrying out large-scale business activities and served by Unibank and HSBC Bank Armenia effected large-scale transactions involving the deposition and withdrawal of US dollars. The banks in question also recorded large-scale transactions involving the deposition and withdrawal of foreign exchange in cash by clients. The CBA reports that the operations in question are most likely intended for serving the shadow turnover of the business organizations. The CBA presented the information to the RA Customs Service.

During the period under review, the lowest exchange rate was set by the exchange offices of the Armenia hotel complex (274 AMD/$1), Keramika (275 AND/$1), PSR (Ani hotel) (275 AND/$1). According to the CBA, the companies in question have always set low exchange rates on the market. As regards other exchange offices, the Valletta Ltd set the lowest exchange rate – 276 AMD/$1.

Inspections conducted by the CBA revealed numerous violations committed by the Valletta Ltd and a number of other exchange offices. Among the violations are the failure to issue receipts, deviations of the cash balance from the calculated amounts. The CBA imposed fines for the violations – 50,000 AMD to 75,000 AMD. The CBA also intends to invalidate the licences issued to seven exchange offices. –0--