The Russo-Ukrainian war generated perturbations on the currency market of the Republic of Moldova, underlining further the pressure that is dictated by the energy sector already. Since the start of the war, the Moldovans have bought about US$400 million for making reserves. Currently, the pressure on the currency market is close to US$1 billion and is similar to the 2015 bank fraud situation, Veaceslav Ioniță, economic expert of the Institute for Development and Social Initiatives “Viitorul”, stated in the program ”Economic analyses with Veaceslav Ionita”, IPN reports.
According to the expert, the panic caused among the population by the Russo-Ukraine war had a reflection on the currency market and the market of bank deposits. Scared, the people bought foreign currency and will now try to sell it back.
“In March, for the first time in the history of the Republic of Moldova, the Moldovans sold less currency than they bought. The war in Ukraine scared the Moldovans and led to perturbations on the currency market. They purchased, without necessity, about US$400 million to protect themselves,” stated the economic exert.
He noted that the population’s net currency sales in annual values decreased from US$2.383 billion at the end of last year to US$2.047 billion at the end of the first quarter of 2022, down US$336 million. This way, a large deficit appeared on the currency market. In annual values, this was almost US$990 million the last two months. Also, Veaceslav Ioniță said that this situation represents unprecedented pressure on the currency market and it will continue. The cause is not only the war in Ukraine. The gas issues that started last November also have an impact.
So, in 2021-2022 the deficit was about US$1 billion. The National Bank’s foreign exchange reserves decreased by only US$484 million. The rest was compensated by the foreign partners. According to the expert, all the National Bank’s reserves the next two-three months will be supplemented, including with currency that will come as foreign funds. Furthermore, the US$400 million bought by the citizens will be returned as the people started to spend.
Veaceslav Ioniță also said that now the Republic of Moldova is witnessing a powerful appreciation of the dollar at international level. The dollar appreciated also against the Moldovan leu. But the Moldovan leu is stronger than the other currencies due to the significant depreciation of the Ukrainian hryvnia. The Moldovan leu is practically stable, with periodical oscillations during the year. “I’m sure that this historical anomaly, when the currency supply from the population was negative because the people didn’t purchase more dollars than they sold, this panic was overcome without particular costs.”
At the end of March, the foreign exchange reserves of the National Bank of Moldova were about US$3.4 billion.
