National currency appreciates against US dollar

The Moldovan leu has appreciated against the US dollar in the wake of the National Bank of Moldova's (NBM) decision to raise the foreign currency reserve requirements, Info-Prim Neo learned from Dr. Sveatoslav Mihalache, director of the consulting firm Financial Brains. On Monday, the NBM posted a reference rate of 11.35 lei for one dollar, as compared to 11.65 lei two weeks ago. “The National Bank decided to raise the reserve requirements to contain the growing inflation rate. The National Bank has already changed its (inflation) forecasts from 7% to 8.5% for this year, as well as the prediction for the next year”, explained Mihalache. The support level of the MDL/USD pair currently stands at 11.25 lei, and Mihalache says it is very unlikely that it will drop further as there are no other visible domestic factors that could lead to a deeper decrease. “However, we should not forget the fluctuations of the euro on the global markets, which also influence the exchange rates of the dollar”. Concerning the euro, the expert said that at the end of last week it saw another drop from $1.47 to $1.43. “There is a likelihood that after this drop there will be a correction to $1.45. However, the Financial Brains team believe that in the long rung the euro could further drop to $1.37. The main causes are the unsolved problems with Greece's sovereign debt, the financial woes in Portugal and Ireland, and potentially in Spain, Italy and other EU countries”, said Sveatoslav Mihalache. He explained that if Greece resorted to debt restructuring, a domino effect would emerge in other EU countries. “Now everything depends on how international organizations, like the IMF, and EU politicians handle the situation in the so-called peripheral European countries”.