Veaceslav Ionita explains exchange rate shifts

Economist Veaceslav Ioniță claims that the European currency is falling due to three factors, and that the Moldovan leu will have kept a stable rate by election time, with slight growth relative to the American and European currencies. The economist published these forecasts within a lengthier analysis on his blog, IPN reports.

According to Veaceslav Ioniță, one of the factors that have lead to the rise of the leu is international in nature. Recently, the euro has fallen relative to the dollar on international markets by 2.2%. Another factor is seasonal. Foreign currency falls in Moldova three times a year: during winter holidays, at Easter, and in August, when Moldovans come from abroad with foreign currency and authorities drop the rates for it.

Veaceslav Ioniță also pointed towards the foreign currency excess on the market. Since the beginning of the year, the population has sold 650 million dollars more than the business sector demanded.

In the expert’s opinion, we are in for two radically opposed phenomena. On the one hand, the Law on capital amnesty will, most likely, generate a new inflow of foreign currency and, on the other hand, the last 15 years show that during election time some actors take their offers off the market and generate increased demand.

“I tend to believe that these two opposing trends will cancel each other out, and that we will ultimately not witness major changes to the currency exchange market. In my opinion, the moldovan leu will keep a stable rate until elections, with a slight upward-sloping trend relative to the dollar and euro,” the expert says.

Since January 2016, the leu has grown by 23% relative to the dollar, and by 15% relative to the euro.

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