The Moldovan leu will continue to depreciate over the next 2-3 months until the measures to diminish the liquidity on the market start to have an effect. It’s hard to say how much the leu will depreciate as there are many factors that will influence this process. Optimistically speaking, Moldova will be confronted by an economic crisis similar to that of 2008 or even worse than that of 1998, considers the director of the Rating and Assessment Agency “Estimator-VM” Natan Garstea, who stated his opinions on his blog.

“Only after the exchange rate of the leu stabilizes, the monetary regime will relax, the interest rates will diminish and banks’ reserves will decrease and only afterward conditions will appear for the economy to recover. The economic crisis will lead to more expensive imports, not only such as luxury cars and clothes. The electricity, gas, medicines, the domestic appliances and other imported products will also grow dearer. The price of raw material will increase and this will affect the prices of national products too,” wrote Natan Garstea.

All the payments made in foreign currency will increase in size. As a result of the measures taken to sterilize the money mass, the insufficiency of money will start to be felt, especially among companies. The banks will release a lower number of loans and these will be much more expensive. Most of the lending agreements envision the modification of the interest rate if the refinance rate is changed. Many of the companies with large debts will become insolvent.

Owing to the aforementioned factors, the economic activity will become blocked or will even enter recession. The financial constraints will affect the salary earners (layoffs, lower salaries or diminution of the purchasing power of salaries) and, consequently, consumption will decrease. The people will become much more cautious owing to the gloomy future, while the importers of goods or services and the traders (shops, shop chains and online shops) will be the worst hit.

However, Natan Garstea said the created situation provides a number of advantages – the exporters receive more lei if they sell products abroad at the same price in foreign currency. Also, the persons who receive remittances from abroad will have larger sums in lei. In time, the price rises will catch up with the rise in the exchange rate and this effect will diminish.