In October 2021, the official reserve assets of the National Bank of Moldova reached a historical high of US$4.073 billion. Now they total US$3.421 billion, down US$652 million. This is the fourth significant reduction in the official reserve assets in the country’s history since the obtaining of independence. Economist Veaceslav Ioniță anticipates a slight diminution of the official reserve assets during a very short period of time. The expert said that owing to the external support, the reserves will be restored swiftly, IPN reports.
The economic policy expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță said that the National Bank started to intervene in the currency market last March. But the intervention was minimal. There were four main factors that influenced the central bank’s intervention - the energy crisis and unprecedented rise in import prices of natural gas, the panic caused by the war in Ukraine, which generated massive purchases of foreign currency among citizens and businesses, the exercise loan-based consumption of the population in 2021 and the central bank’s fight against inflation, and the foreign partners’ support.
The money that came from the International Monetary Fund in the form of loans and from the European Commission in the form of grants diminished the impact of the crisis. In fact, of the total of at least US$750 million intervention, the National Bank of Moldova contributed own reserves representing at most 40-45%. The rest was covered with money coming from the development partners.
According to Veaceslav Ioniță, the energy crisis will continue the coming months, but its intensity will decrease. The pressure of energy prices on the currency market will be lower than during the past five months. The panic caused by the war in Ukraine ended and the population returned to normal activity. The citizens are even expected to sell currency. The panic no longer negatively influences the currency market. The problem of prices in 2022 will be more acute than in 2021.
The central bank will have to intervene to protect the people, but this intervention will be several times lower than the intervention caused by the energy crisis and the panic in February. The foreign partners will increase the support for the Republic of Moldova and this will enable to restore and even to increase the official reserve assets over the level of last March.
