Armenian companies holding dollars, euros and drams: managing currency moves
The Armenian dram strengthened sharply against the dollar in 2022 and 2023. Exporters earning dollars and paying costs in drams lost margin they had not planned for. A simple currency policy limits the damage of the next move.
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A Gyumri electronics design firm earned $2.4 million in 2021, mostly from US clients, and paid most of its costs in drams. Over the next two years the dram gained about a fifth against the dollar. Revenue in dollars rose; revenue in drams barely moved; salaries in drams went up. The firm's profit fell by half without losing a client.
Measure the exposure
Take twelve months of figures by currency:
- revenue in dollars, euros and drams,
- costs in dollars, euros and drams.
Net dollar exposure is dollar revenue minus dollar costs. Apply a 10 percent move to it. For many Armenian exporters, that number is larger than a year of office rent.
Match first
Some costs are already in dollars or euros: cloud services, software licences, equipment, conference travel, contractors abroad. Paying them from dollar and euro revenue shrinks the exposure and removes two conversions each time.
Schedule the dram conversions
The rest must become drams for salaries, rent and taxes. Converting each client payment on arrival leaves the rate to chance. Converting a planned amount ahead of each payroll averages the rate and lets you budget in drams with some confidence.
Salary clauses
Many Armenian tech companies benchmark salaries in dollars and pay the dram equivalent. When the dram strengthens, the employer pays more drams for the same dollar salary. Some companies fix salaries in drams and review them yearly instead. Either works; be explicit in contracts which one you use.
Where Rivet fits
A Rivet business account accepts registered companies after verification, including Armenian companies. Approved companies receive dollars on US account details in their own name on every plan and euros on an IBAN from the Growth plan. Balances can be held, used to pay suppliers and contractors in 120+ countries, or converted when you choose at a rate shown before you confirm. Rivet is not a bank; regulated partner institutions hold the funds.
Questions people ask
Why did the dram strengthen after 2022?
Large inflows of people, businesses and money into Armenia from 2022 raised demand for drams. The Central Bank of Armenia publishes the history.
How do I measure my exposure?
Split twelve months of revenue and costs by currency, take net dollar revenue, and apply a plausible rate move to see the impact on profit.
Can I pay salaries in dollars?
Armenian rules generally require payments within Armenia in drams, with exceptions. Many companies benchmark salaries in dollars and pay the dram equivalent. Check the rules with an adviser.
When are forwards useful?
When a company has a large, predictable dram need, such as months of payroll, and a bank that offers forwards at a reasonable cost.
Sources
William covers what happens once a company starts moving money: getting the business verified, paying contractors and suppliers abroad, and keeping card spend under control. William writes for the founder or finance lead who has to make it work this week, and links every rule cited to the text it comes from.
More from William Sunjo M. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
- armenia
- amd
- currency risk
- exporters
- usd
- treasury
