Armenian Central Bank raises refinancing rate after currency fall

Armenia’s Central Bank has raised its key refinancing rate from 6.75 percent to 8.5 percent, citing the need to curb inflation after the national currency, the dram, registered a fall by more than 10 percent.

The Central Bank kept its refinancing rate unchanged at 6.75 percent in September and November after cutting it from 7.00 percent in August.

It said the monthly inflation in November stood at 1.3 percent, compared to the inflation of 1.0 percent in October.

Prices for some basic foodstuffs and other essentials shot up in Armenia earlier this month amid a dramatic depreciation of the national currency, the dram. Amid what many observers described as “panic currency buying” by December 17 the dram hit its historic lows at over 600, before rebounding quickly to its current levels of 450-460 per US dollar. The prices for most goods that were raised by retailers also decreased, but some of them still remain higher than the “pre-crisis” level.