After a continuous appreciation of the Moldovan Leu against the USD and Dollar over two years, starting with September we are following a slow depreciation of the national currency. Thus, if we analyze the Dollar + USD currency basket, the Moldovan leu appreciated against both currencies over two years, with 18.1% from 21.24 points in May 2016 to 17.98 points in August 2018.
For each currency separately
Moldovan leu appreciated against USD 19.6% from 19.86 USD / USD in March 2016 to 16.61 USD / USD August 2018. Compared to Dollar, the USD appreciated by 17.3% from 22.47 USD / Dollar at 19.16 USD / Dollar, writes on his blog the economist IDIS Viitorul, Veaceslva Ioniță.
But from August we are continuing a continuous depreciation of the leu against both currencies. Thus, in December compared to August the Moldovan Leu depreciated by 3.7% against the US Dollar from 16.62 USD / USD to 17.23 USD / USD. And against Dollar, the depreciation was 2.4% from 19.16 USD / Dollar to 19.61 USD / Dollar.
This depreciation occurs due to the increase in the demand for foreign currency from the economic agents under the conditions of a constant supply from the population. Thus, the annual supply of currency from the population remains stable at the level of USD 2 billion annually. Instead, demand is constantly increasing. If a year ago the demand for foreign currency was at $ 1.7 billion annually, now it is approaching $ 2 billion annually, and in the last months of the year, the demand is higher than the offer, which forced the NBM to make small interventions on the foreign exchange market.
The increase in demand for foreign currency
Economic agents is explained primarily by the increase in imports of goods, caused by the increase in demand generated by consumer loans from the population. Thus, this year we have a strong growth of consumer loans from the population. in the banking sector alone, the population’s credit in 2018 increased by over 2.3 billion USD, of which more than half are consumer loans.
Here we add another 2 billion USD consumer loans from the non-banking sector. Thus over 3 billion USD loans from the financial system went to the predominant consumption of import goods, which meant the arrival of money on the foreign exchange market.
We can say that the population by increasing the consumption of this year has solved two fundamental problems of our economic system.
On the one hand, it contracted loans and reduced from excess liquidity in our banking system, and on the other hand, this money entered the foreign exchange market and reduced from the pressure of appreciation of the Moldovan leu.
For the coming months, as I said before, the leu will have a stable quotation against USD and Dollar with a slight depreciation. The NBM has all the instruments of intervention in the foreign exchange market, the foreign exchange reserves exceed 3 billion USD, but these interventions must be done very cautiously to avoid sudden fluctuations.