Armenia Adds CBA Board Member; FX Edges Up

Armenia’s parliament approved the appointment of a new member to the Central Bank of Armenia (CBA) board, reinforcing policy continuity and institutional strength at a delicate juncture for the economy. The decision, viewed as a vote of confidence in the CBA’s inflation-targeting framework, comes as growth stabilises and headline inflation continues to moderate. The dram appreciated slightly against major currencies, reflecting both resilient fundamentals and favourable regional sentiment, while the Russian ruble also strengthened modestly.

The CBA’s disinflation strategy remains on track, supported by prudent liquidity management and well-anchored expectations. Credit growth has stabilised at mid-single digits, non-performing loans (NPLs) remain low, and banking-sector buffers are sound. However, capital expenditure remains subdued due to persistent global uncertainty and terms-of-trade adjustments. Markets are now analysing the new board member’s orientation on real interest rates, open-market operations, and the pace of balance-sheet normalisation.

Policy transmission remains effective through the CBA’s credible communication and exchange-rate flexibility. Remittance inflows and export receipts continue to underpin FX stability, though seasonality and energy prices remain key variables. Externally, the strong U.S. Dollar Index (DXY ≈ 106) and steady Brent crude (CL=F ≈ US$89) shape imported inflation dynamics and regional risk premia.

The base case remains a steady policy path with gradual real-rate normalisation as inflation converges toward target. The risk scenario involves renewed energy volatility or geopolitical frictions that could lift inflation variance and postpone easing. Analysts will monitor CPI expectations, T-bill auction coverage, and bank credit surveys for signs of policy recalibration.