Because of economic downturn, the stock exchange of Armenia is planning to boost their currency operations through attracting back commercial banks. Aside from that, they will also be introducing their new online platform, as well as mechanisms for deferred settlements, according to its boss who told Reuters on Monday.
NASDAQ OMX Armenia, the only active stock exchange in this former Soviet country, is part of the NASDAQ OMX Group, Inc. Its stocks saw a decrease in the volume of currency transactions by 58 percent year-on-year to $313 million of last year.
What does the Decline in Volume Currency Transactions Mean?
“We are concerned that there are no currency operations in the stock exchange and we are trying to change our business model,” says Director General Konstantin Saroyan.
According to Saroyan, the demand for dollars had dropped and commercial banks were purchasing foreign currencies from other providers — the interbank market, via over the counter deals and other central bank interventions.
“We are also planning to launch a Tom Next (Tomorrow Next) mechanism of deferred settlements,” said Saroyan. Currently, they are requiring upfront deposits if you are transacting for forex.
Saroyan added that, “Analysing the situation in the economy, I feel that demand for dollars has declined due to a decline in remittances and a decline in imports.”
Brief Overview of Armenia
Armenia is a country of only 3.2 million people. The country depends mostly on aids and investments from its former Soviet overlord, Russia, which is currently experiencing an economic recession. This greatly affected the Armenian exports and remittances from Armenians working in Russia.
Aside from that, the imports to Armenia have also decreased to $3.264 billion from $4.424 billion in 2014. Moreover, remittances from Armenians working abroad dropped from $1.2 billion two years ago to $857 million in 2015.