YEREVAN, MARCH 10, NOYAN TAPAN. There was an agiotage decline in exchange rates in the Armenian foreign currency market on November 23-25, 2007, and the Central Bank of Armenia (CBA) announced that the results of its checks would be made public after the elections. NT was informed by the CBA press service that what happened at that time was the result of the speculative behavior of some banks and exchange offices operating in the market, as well as of several businessmen's large-scale cash transactions with foreign currency. Out of the banks operating in the market in the indicated period, Prometey Bank LLC was the one to establish the lowest exchange rate, lowering it to 280 drams. By buying foreign currency at a low exchnage rate, the indicated bank's branch in Tigran the Great Avenue contributed to the formation of queues of citizens in Ardshinvestbank CJSC (located about 100 meters away on the same avenue). Ardshininvestbank in its turn did not refrain from making incomes through buying U.S. dollars at a low exchange rate, estabslishing the exchange rate at 291 drams against one dollar. Another bank located a little away - HSBC Bank Armenia CJSC fixed the exchange rate at 300 drams against one dollar, which resulted in longer queues at this bank. In connection with this fact, the CBA took a numer of measures, including checks in Prometey Bank LLC, paying attention to all the functions and processes related to the purchase and sale of foreign currency. The checks revealed violations of the acts regulating the sector, as a result of which punitive measures were taken with respect to the bank, including suspension of the operation of one of its branches, which was actively engaged in the purchase and sale of foreign currency. The bank was also instructed to tighten control in the other branches. It was decided to suspend the operation of the other branches of the bank as well if the bank fails to carry out these instructions within 3 months or carries out these instructions improperly. The bank was also instructed to revise its activity and to present a new program, according to which the bank and its branches should not conduct the policy of making foreign currency exchange as one of the main activities of the bank, which will probably result in a decline of the share of incomes from foreign currency exchange in the overall incomes of the bank. (The decision on the punitive measure with respect to Prometey Bank is available at www.cba.am). Cash operations with U.S. dollars, which were done by natural persons with each other and some banks (Armeconombank OJSC, Ararat Bank OJSC), were registered as well. Some of these natural persons are former employees of exchange offices. It is noteworthy that deals of these groups were conducted every day during the indicated period. The CBA transferred the summary information on these persons to law enforcement bodies for further examination. Cases of cashing large amounts of dollars were registered in the banking system on November 19-23, 2007: the total amount made 10 million USD, and it is impossible to trace the further "fate" of 3 million dollars of this sum by using the information collected by the CBA. Big operations on deposit and withdrawal of cash in dollars were done by some organizations engaged in entrepreneurial activity - customers of Unibank CJSC and HSBC CJSC. At the same time, big operations on deposit and withdrawal of foreign currency by natural persons - customers of the same banks were registered. Based on the results of the CBA's analysis, there is much probability that these operations service the shadow turnover of some organizations engaged in entrepreneurial activity. This information was sent to the State Tax Service. In the indicated period, the lowest exchange rates were established by the following currency exchange points: Armenia Hotel Complex (purchase rate 274 drams), Keramika LLC (275 drams), PSR LLC (Ani Hotel) - (275 drams). According the CBA, these companies have always displayed such behavior, they establish the lowest exchange rates in the market. As for other exchange points, Valetta LLC was the one to fix the lowest rate of 276 drams. Numerous violations were registered during CBA checks in Valetta and several other currency exchange points. Fines from 50 thousand to 750 thousand drams were imposed on economic entities for these violations. The proceedings on cancelling the foreign currency purchase and sale licences of 7 exchange points are underway.

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