Rational choice of Armenian entrepreneurs Therefore entrepreneurs do not risk entering into long-term contracts, because no one knows what value the Russian ruble will have in five years.” If you are dealing with a currency that is prone to sharp fluctuations, this creates a certain risk. For example, if they received components from Russia, manufactured products in Armenia and sold them to Russia, they would be able to balance these losses thanks to mutual settlements with suppliers, which would need to be made in rubles.īut when a business carries out its activities in drams, receives components for example from China and makes payments in dollars, and sells its products to Russia for rubles, it will be very difficult to manage such risks.Ī change in the exchange rate in this situation will greatly affect revenue, because it will be necessary to carry out a three-fold operation - to convert rubles into drams and drams into dollars, in order to settle accounts with the Chinese. The same is true with any currency, including the ruble.īut the problem is that entrepreneurs working with Russia do not have mirror operations where they can balance the potential loss or increase in value. This is a mirror operation, and dollar volatility doesn’t matter.

In this case, regardless of the dollar exchange rate, potential losses will already be balanced by potential profits.

For example, if an enterprise carries out a certain kind of activity in dollars, respectively, receiving revenue in this currency, then it can balance the risks associated with currency fluctuations by making its costs also in dollars. This can lead to losses for the companies themselves due to settlement losses.īut flexibility can make a difference and balance those risks. And any changes in the market situation during this period, for example if the ruble depreciates against the dram or vice versa, create certain risks that will be difficult to avoid. When switching to ruble settlements with Russia, they need to convert proceeds either into drams or dollars in order to make settlements with suppliers and employees. It’s all about the flexibility of our exporters.Īrmenian enterprises carry out their expenses not in rubles. “The refusal to settle in dollars or euros in trade with Russia may not affect the Armenian economy. Stagnant economic ties in the South Caucasus: Three stories.Volodin’s statement: what is behind it? Comment.Western sanctions are also expanding, however, but according to experts these sanctions will not affect Armenian exports.ĭue to the rejection of mutual settlements in dollars and euros, Armenian exporters face new risks that will be difficult to overcome. The Armenian dram is preferable in settlements, but its potential for use in bilateral trade is limited.Įxports from Armenia to Russia increased dramatically due to the withdrawal of Western companies from the Russian market, which has allowed Armenian suppliers to expand their business in Russia. The choice of currency for payment has become a major problem for trading partners in the current environment, as the Russian ruble is currently too unstable against the dollar and the euro to conclude long-term contracts. Armenia and Russia have completely stopped mutual settlements in dollars and euros, as announced by the Minister of Economy of Armenia Vahan Kerobyan.

Russia currency value