Strong Armenian currency.

It's been a few years since the Armenian currency, dram, started appreciating against other currencies. In 2003, when I was in Armenia and came face to face with the weak purchasing power of my money when converted to drams, I was a little bit pissed off. Since the college days I had had a strong conviction that the Central Bank should try to maintain a stable exchange rate - buy or sell foreign currencies as needed in order to avoid wide fluctuations. The free market approach by the Armenian Central Bank annoyed me; they isolated themselves from the market and let everybody else determine the value of the dram.

Now I am starting to change my opinion about the CB attitude. While my dollars are worth much less than in 2003, I think that CB staying out of the foreign exchange markets has actually been a good thing. Evidence shows that state agents almost always screw up when they mess with the economy, and then often painful reforms are needed to undo the damage caused by such interference.

Coincidentally, the IMF is praising the CB approach in an RFE/RL article. I don't know what to think; the IMF attributes the strong economic growth to the CB non-action which although I agree, I am pessimistic enough to take the words of the IMF at face value. The IMF can be quite hazardous for the health of a third world country's economy. Remember Argentina?