Tatiana Ivanicichina: Exchange rate depends on developments in supply and demand, not on NBM

Some may believe that the National Bank of Moldova changes the exchange rate at its pleasure, but the exchange rate is actually determined by developments in supply and demand in the domestic foreign exchange market. The official exchange rate of the Moldovan leu is calculated against the US dollar based on the purchase/sale transactions by transfer of US dollars against Moldovan leu on the domestic foreign exchange market, the new Deputy Governor of the NBM Tatiana Ivanicichina stated in an exclusive interview for IPN.

„So, the National Bank does not set the exchange rate "at its pleasure". This depends on developments in supply and demand in the domestic foreign exchange market, not on the NBM. The National Bank does not aim at establishing a certain exchange rate, the main purpose of the NBM is to maintain price stability,” said the official.

In this regard, monetary policy instruments are applied, among which are the interventions in the foreign exchange market, when the NBM buys or sells foreign exchange in the market. These interventions have one purpose - to avoid exchange rate volatility. I will be more explicit: I think that nobody would like to see a rate of MDL 15 for USD 1 today, MDL 20 for USD 1 tomorrow and MDL 17 the day after tomorrow. Thus, to avoid sudden oscillations, interventions in the foreign exchange market are used, stated Tatiana Ivanicichina.

Over the last years, the NBM has made considerable efforts to have an explicit communication to the public, but this proactive attitude is not enough. There is a need for feedback from the public, from cultivating an informed interest and behavior, because decisions do not have an one sided effect. The impact necessarily involves the expectations of the public, which should be based on certain general financial knowledge.

For the purpose, the NBM carries out several financial education projects aimed mainly at young people, and at other target groups, including the business environment. This way, the National Bank of Moldova supports the citizens with the necessary information as a resource of financial education. A well-informed person will manage his income by optimizing the expenses and will know how to avoid or minimize financial risks, will save, learn to invest and constantly deepen his knowledge to make well thought-out and correct financial decisions, said the NBM’s Deputy Governor.

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