National Bank says Moldovan leu's appreciation triggered by excess of currency on market

Chisinau, 07 May /MOLDPRES/ – The appreciation of Moldovan leu against foreign currencies is determined by market situation in conditions of an excess of foreign currency. "The National Bank fixes official exchange rate of the Moldovan leu only in relation to US dollar, depending on volume of transactions and price at which these transactions were carried out on foreign exchange market," said First Deputy Governor of the National Bank of Moldova (BNM), Vladimir Munteanu, in presentation of Inflation Report №02.

According to the BNM’s information and media communication service, exchange rate of national currency against the US dollar went down from MDL 17,1002 for $1 in early 2018 to MDL 16,6191 on 7 May 2018.

The BNM massively intervened in currency market during first quarter of 2018 "to absorb excess freely convertible currency and temper volatility of national currency." As a result, Moldova's international foreign exchange reserves have reached $2 billion 875 million.

Regarding decrease of leu – euro exchange rate, especially in recent weeks, Vladimir Munteanu mentioned: "The leu exchange rate against the euro is calculated mathematically, based upon $ against €. In recent few weeks the euro has depreciated against the dollar by almost 4 per cent "and this trend could be" maintained."

The Independent Analytical Centre "Expert-Grup" finds in its latest MEGA publication that in 2018 "increase in exports and maintenance of external financial assistance will stimulate inflow of currency. In the context, there will be pressures on appreciation of Moldovan leu. Under these circumstances, BNM will have to buy foreign currency to smooth out currency dynamics so as to diminish negative impact on trade balance. "According to newspaper, on background of appreciation of the national currency, increase in prices for certain categories of non – tradable goods (goods not subject to export – import operations) may increase."

The forecast of the Ministry of Economy and Infrastructure (MEI), coordinated with International Monetary Fund (IMF), shows a decrease in the annual average of leu exchange rate from MDL 18.49 per $1 in 2017 to MDL 16.83 in 2018 and MDL 16.99 per $1 in 2019. The national currency against dollar will return to an annual average of MDL 17.97 in 2020 and reach level of MDL 18.51 per $1 in 2021.

(Reporter V. Bercu, editor L. Alcaza)