It is not right to engage the National Bank of Moldova (NBM) in short-term political processes. “The National Bank is in society and it is influenced by what is happening in society, while the politicians, even if they decide to make suggestions, should do this prudently so that this is not seen as interference in the NBM’s activity,” Veaceslav Ioniță, economic expert of the Institute for Development and Social Initiatives “Viitorul”, stated in IPN’s public debate “Fluctuation of exchange rate, what it depends on and what we should know about it?”
Veaceslav Ioniță said the exchange rate in the Republic of Moldova is relatively the same because the margin is very small. In times of stability, the difference between the purchase and sale of currency at currency exchange facilities is very small compared with any other country. The margin rises in times of instability when the exchange rate goes up or down.
The expert noted that the NBM is an independent institution, but it is not isolated from society and it should hear the signals coming from society. The leu started to depreciate exactly after the political statements according to which the exchange rate should have been modified in favor of particular economic groups, but the fluctuation that followed is not related to politics, but to a decision taken by the NBM. “Owing to this year’s low inflation, next year we risk having the smallest pension indexation in Moldovans history,” he stated.
Veaceslav Ioniță noted the low demand for currency is due to two factors: 1) lower consumption of the population and 2) favorable international conjuncture related to energy resources as a result of which the country in 2020 will have the smallest bill for energy resources. This pressure that led to a lower demand for currency was enormous pressure exerted on the currency market. In May, the National Bank started to buy currency from the market so as to balance it.
According to the expert, this year, which was a very confused period when the currencies appreciated and then depreciated suddenly, the NBM managed to ensure that we end the year in a comfortable position. In the long run, with small exceptions, the Moldovan leu advanced rather well. The ‘carrousels’ were the only negative aspect and the Bank should make sure that there is quietness on the market and the normal parameters are met.
The expert recommends the population to keep saving in the short term in the currency in which they were accumulated or in which transactions are to be performed. In the long run, savings should be deposited at a bank with interest, in Moldovan lei. Practice during the past 20 years showed the savings in ley yield the best profit.
The public debate “Fluctuation of exchange rate, what it depends on and what we should know about it?” was the 162th installment of the series “Developing political culture through public debates” that is supported by the Hanns Seidel Foundation.
