Depreciation of leu against euro derives from developments on international markets, expert

The euro during the past three months has appreciated slowly, but steadily against the Moldovan leu. At the start of last September, one euro cost 19.67 lei, while on January 25 this year it reached a high of 21.29 lei. Today, January 27, one euro is sold for 21.09 lei. Economist Alexandru Fala, programs director at the Independent Think Tank “Expert Grup”, has told IPN that the depreciation of the leu against the euro derives from the developments on international markets and Moldova cannot influence the situation.

“The euro has appreciated significantly on the international markets, especially against the dollar, and this thing automatically leads to the appreciation of the euro against the leu,” stated Alexandru Fala.

The expert said the depreciation of the leu favors those who have revenues in euros, but disfavors the persons who perform transactions in euros on the market in Moldova, for purchasing real estate, cars, etc. The main risk of the depreciation of the national currency is related to the rise in prices. The imported goods grow more expensive as one must pay more lei for them. However, given the global economic recession, which determined a rather serious decline in prices worldwide, the Moldovans will not seriously feel the depreciation of the national currency.

Excluding the fluctuations in the rates of different currencies, the leu in the Republic of Moldova in the course of 2020 had appreciated against a series of currencies. It goes to the nominal effective exchange rate. The leu depreciated against the euro, but other currencies depreciated faster. “The nominal effective exchange rate at which the value of the leu is set in relation to a currency basket points to appreciation throughout 2020,” noted Alexandru Fala.

The expert said that besides the leu-euro exchange rate, there are also other factors that should be taken into account. For example, the Romanian leu depreciates against the euro more seriously than the Moldovan leu and this is detrimental to Moldovan exporters.

Alexandru Fala could not say for how long the euro will yet appreciate, but said that the situation is not dramatic for the Republic of Moldova. The euro appreciates in a circumstance that diminishes its negative effects. Furthermore, if the euro appreciates slightly, the Moldovan exporters are somehow favored.

The official exchange rate of the national currency is relatively stable. Four the National Bank to influence it, this should intervene and purchase dollars on the market so as to influence the exchange rate against the dollar. In the future, depending on the situation, the official exchange rate could be changed so that it is set in relation to the euro, not to the dollar. This should be probably done as the number of operations in dollars has declined, concluded the expert.

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