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Things about the Moldovan Leu you should know

In the period of transition to the market economy the Republic of Moldova has ceased to be among the states, where currency interest rates are only external economic agents. Many ordinary citizens have discovered the fact that many things depend on the ratio according to which our currency is exchanged: the price for imported goods, and as a consequence, for municipal services, as Moldova imports the biggest part of energy. That is why everyone is interested in how the Moldovan leu " behaves " in relation to foreign currencies, first of all - to the US dollar.

The NBM official rate of the Moldovan leu to the US dollar is calculated on the basis of an average weighed rate of all bargains on the exchange market of Moldova. When the rate is calculated, the National Bank takes the bargains, which have been carried out from 12.30 of the previous day till 12.30 of the current day, on interbank and inbank market (bank - client). The rate is calculated automatically, on the basis of what was formed on the market. All remaining currencies are recalculated according to the cross rate situation on the world exchange market, tracked by Reuters, at 14.00: for the definite moment the rates are fixed, the cross rate in relation to the leu is calculated, and this rate becomes official.

The National Bank of Moldova as well as independent economists often state that the rate of the dollar to the leu is subject to seasonal fluctuations. These fluctuations are related to the fact that in certain months of the year the currency demand exceeds the supply, that is, in its turn, connected to a number of objective factors of the national economy. For example, during February - March and till the middle of April the leu usually goes down. It is connected to the beginning of agri-industrial works, and raw materials, spare parts and fuel are purchased to conduct them. In summer months already for many years the leu is stable.

Approximately, in August - September currency receipts from the export of agricultural production start coming, and currency demand on the market increases.
The seasonal prevalence can also be seen at the end of the year - in December and at the beginning of the year - in January. In December it is connected to the increase in the volume of purchases made by the population, for which many people convert their currency savings into the national currency, and it is also connected to the end of the fiscal year, when many companies convert their currency savings into lei in order to improve their financial indicators.

The strong currencies, such as the US dollar, the Japanese yen, the British pound sterling, etc., are very elastic and the markets immediately react to the news about changes of macroeconomic parameters of the issuing countries, whether it is inflation, unemployment, GDP volume, or different statements by presidents. It is connected to the fact that there are many participants in their markets and they are more effective. In Moldova we cannot see such a tendency, since the leu rather reacts to the market as if rushing after it, that is, not immediately after certain events and factors, which in some other countries are reflected in the currency rate right away. The major basis for the rate determination is, nevertheless, supply and demand, which are objectively formed at the expense of receipts or outflow of currency from the country. And the macroeconomic parameters are secondary, as their influence bears a long-term character.

Basically, Moldova cannot be compared with economically developed countries even theoretically. We are living in a country with a history of high inflation and consequently dollarization (the ratio of the dollar deposits to lei deposits is rather high). Psychologically, the strengthening or stability of the leu and low interest rates lead to de-dollarization, but it is a long-term phenomenon, on which operative news and events have little influence.

As far as the prognosis of the evolution of the currency exchange rate in the year 2002 is concerned, it can be mentioned that the National Bank does not publish its forecasts, since the Moldovan leu is a freely floating currency and the objective factor for the currency exchange rate formation is supply and demand on the exchange market. However, the National Bank watches the dynamics of the leu rate and, in case of its unjustified deviation from the actual rate, i.e. the rate regarding the inflation, does not exclude a possibility of currency interventions.


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