The Moldovan leu last week depreciated slightly against the main currencies. Even after a slight depreciation of 0.3% during June 12-18, the leu is by 7.8% stronger than at the beginning of the year against the main ten currencies of the countries with which Moldova has the most intense commercial relations, said economic expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță, who analyzed data of the National Bureau of Statistics, IPN reports.
“If we analyze all the reference currencies on the NBM’s website, we can see that the Moldovan leu has appreciated against all of them, except for two currencies – Hungarian forint and Albanese lek. This appreciation is due to two main factors. The currency demand from business entities has decreased relatively considerably, while the currency supply from private individuals has increased significantly,” explained Veaceslav Ioniță.
According to him, in annual value, the currency demand from business entities decreased by US$236 million, from US$3 billion in 2022 to US$2.8 billion in April 2023. This decline is determined by the cheapening of energy resources and also by the stagnation of population’s consumption.
“The currency supply from private individuals rose to US$2.9 billion, which is close to the absolute record set in 2013. In my opinion, this supply, for its part, is influenced by three factors. It goes to the population’s consummation needs that are not covered by current needs. The prices grew faster than the incomes and the population pays for a part of consumption with currency savings. The second factor is the conversion back of currencies due to the war in Ukraine. During the first two months of the start of the war in Ukraine, Moldova’s population purchased about US$500 million and that currencies are now gradually converted back into Moldovan lei. The third factor is the significant rise in pseudo-remittances.,” noted the economist.
He predicted that the pressure on the currency market over the next few months will be aimed at the appreciation of the Moldovan lei and only the central bank can intervene to stop this appreciation tendency. “A strong leu is beneficial to the population as it means smaller prices of imported products and lower inflation. But a powerful leu affects enormously the national economy and diminishes the competitiveness of local products. When inflation declines, the NBM should stage a slight depreciation of the lei as this will help the local economy and will not negatively affect the population,” stated Veaceslav Ioniță.
