The relative depreciation of the Moldovan leu against the euro during the past few months is primarily due to the appreciation of the euro against the U.S. dollar and other currencies on the international markets. The trend has stabilized in the recent past. The exchange rate of the Moldovan leu against the euro oscillates, reflecting the supply and demand on the domestic currency market and the modification of the exchange rate on international currency markets, IPN reports.
“The National Bank intervenes in the market, if necessary, so as to reduce the excessive currency fluctuations by purchasing or selling currency, as it possesses a wide range of intervention instruments. I will reiterate that the NBM does not forecast and does not target the inflation rate, its key objective being to ensure and maintain the stability of prices,” the governor of the National Bank of Moldova Octavian Armașu stated in an interview for the press.
According to the governor, the central bank analyzes the evolution of the Moldovan lei against the currencies of the main commercial partners of the Republic of Moldova in accordance with the nominal effective and real effective exchange rates. These indicators are most often used to analyze external competiveness.
“The nominal effective exchange rate is calculated as a weighted average of the bilateral exchange rates of the Moldovan leu and foreign currencies, while the real effective exchange rate is calculated by taking into account the inflation. Depending on countries’ weight in the external trade of the Republic of Moldova (both import and export), there were selected the currencies of 17 countries, the principal ones being Romania, Russia, Ukraine and some of the countries of the Eurozone,” explained Octavian Armașu.
Analyzing the dynamics of the real effective exchange rate during the past few years, the National Bank identified an appreciation tendency starting with the second half of 2019 until the third quarter of 2020. A downward correction tendency followed then.
In 2020, the Moldovan leu appreciated in real terms by 5.9% on average, at a time when the currencies of a number of countries with emerging economies lost positions against the U.S. dollar.
