National Bank continues sterilisation operations to offset inflation

In the first quarter of 2007, the daily amount of liquidity in the banking system absorbed by the National Bank of Moldova (NBM) within the open market operations, constituted about MDL 1 bln. NBM certificates worth MDL 3142.8 mln have been placed, at the same being accepted deposits totalling MDL 966 mln from commercial banks. The total value of the sterilisation operations (MDL 4108.8 mln) has remained practically unchanged compared with the fourth quarter of 2006, when it constituted MDL 4075.8 mln. The NBM certificates were issued with a maturity period of 14 and 28 days, based on a demand of MDL 3377.4 mln and supply of MDL 3395 mln. Deposits from banks were accepted for a period of 42-80 days, the supply amounting to MDL 1,020 mln and the demand to MDL 979 mln. The massive sterilisation operations contributed to the diminishing of the combined inflation rate over the last 12 months, from 14.1% in December 2006 to 11.2% in March 2007. This fact allowed NBM to reduce further the base rate from 14.5% to 13.5% annually and respectively promoting lower interest rates within the sterilisation operations – 13.5% and 13.25% annually. The NBM operations were used for withdrawing the surplus liquidity present in the banking system, the main goal being to set the annual inflation rate at 10%.