Armenia’s workers are facing wage cuts and widespread layoffs amid rapid currency appreciation, Radio Free Europe’s Tony Wesolowsky reports. After weakening as Russia invaded Ukraine, the Armenian dram has rallied 13% against the dollar and 22% against the euro in recent months.
Analysts believe the dram’s increased value partly reflects a flood of Russians into one of the few countries still open to its flights. Armenia’s pro-Russian stance, visa-free travel, and open skies have prompted over 100,000 Russian citizens and dozens of Russian tech companies to move in. Among these, over 25,000 opened bank accounts between February 24 and the end of March, leading to a sharp rise in demand for the local currency.
A more expensive currency hobbles Armenian exporters, though, and risks dragging the country into the same deindustrialization beginning to emerge in Russia. Meanwhile, the central bank has resisted calls to weaken the dram as its strength offers an anchor against 8% inflation and makes many imported goods cheaper.