Currency market to be more relaxed in 2018 than in 2016-2017 - expert says

Chisinau, 26 May /MOLDPRES/- This year’s currency market will be more relaxed than in 2016-2017, the pressure on the Moldovan leu will be reduced and we will no longer follow the situation in the previous years of continuous appreciation of the national currency, Economist Veaceslav Ionita said. The Moldovan leu was appreciated in 2017 from 19.9814 at the beginning of the year to 17.1002 lei for one US dollar at the end of the year, while in the first five months of the current year the exchange rate slowed down. The National Bank announces an official exchange rate of 16.8184 lei for a US dollar.

Currently, it is pursuing an acceleration of the demand for currency by legal entities, much faster than the increase in the offer from the citizens, which decreases from the pressure on the leu and even allowed a slight depreciation in May, the expert says.

After 16 months of continuous appreciation of the national currency against the US dollar, in May we saw a slight relaxation of the pressure on the foreign exchange market and a slight depreciation of about 1.1 per cent of the Moldovan leu against the dollar. One of the factors that led to the appreciation of the leu was foreign currency surplus since 2016. In April, the surplus of currency in the annual value reached the record level of 367 million dollars.

The currency surplus was caused by the increase in net offers from the citizens and the reduced demand from the economic agents.

Thus, in late 2015, the net offer of currency by citizens reached the minimum level of 1.5 billion dollars annually. Then there was a period of growth in the supply of currency by the population, which in April 2018 already exceeded 2 billion dollars in annual value. At the same time, the demand for currency by legal entities throughout 2016-2017 registered a slow decrease, then a slight increase, oscillated between 1.5-1.7 billion dollars annually. This has led to the appreciation of the Moldovan leu, Ionita said.

The Ministry of Economy and Infrastructure forecasts for 2018-2021 a depreciation of the national currency. Thus, the annual average exchange rate will evolve from 16.83 lei in 2018 to 17.97 lei in 2020 and 18.51 lei per US dollar in 2021. Relative exchange rate maintenance will contribute to price stability. Thus, the annual average consumer price index for 2018-2020 is forecast at 104.1 per cent-105.0 per cent.

(Reporter V. Bercu, editor A. Răileanu)