Crises of 2022 had a greater impact on currency market than bank fraud

The year 2022 witnessed the most serious crises in Moldova’s history, primarily the energy crisis that followed the pandemic crisis and was fueled by the war in Ukraine. The three crises had a major impact on the currency market, which was even greater than the impact of the bank fraud of 2014, said expert of the Institute for Development and Social Initiatives “Viitorul” Veaceslav Ioniță. He noted that the challenges were overcome due to foreign support and the National Bank’s monetary policy focused on the mandatory foreign exchange reserves. As a result, 2022 was passed in an encouraging way, IPN reports.

The economist stated that five factors created pressure on the currency market in 2022. The first two factors are negative and are related to the energy resources and the war in Ukraine. The other three, positive factors are the National Bank’s intervention, the foreign financial support and the central bank’s monetary policy.

The rise in the prices of energy resources created an enormous demand for currency on the market. This would have led to the depreciation of the leu if the National Bank of Moldova hadn’t intervened. The war in Ukraine during the first months of 2022 scared the Moldovans. These stopped selling foreign currency and bought foreign currency massively.

“The energy crisis and the war in Ukraine generated pressure on the currency market. In November 2021, together with the sudden rise in the price of gas, a shortage of US$273 million was created on the currency market. Things calmed down slightly in December 2021, but the currency shortage started to grow in January 2022 and was later influenced by the war in Ukraine rather than by the price of energy resources. In November 2022, we had again a shortage of US$204 million due to the price of energy resources. The end of 2021 and the whole 2022 in the cold period were marked by the energy crisis and the war in Ukraine, while in the warm period we had a positive supply of foreign currency, which was much larger than the demand,” stated Veaceslav Ioniță.

According to him, 2023 is not expected to be problematic from the viewpoint of foreign currency. Most probably, the prices of energy resources will decline. The prices of oil products and natural gas started to decrease already. The US$2.4 billion spent by Moldova on energy resources in 2022 will speak about a negative reference year. In 2023 and 2024, the imported energy resources will be lower in amount than in 2022. The pressure to buy foreign currency from the currency market will be lower.

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