Foreign currency reserve: NBR starts delving into safes

National Bank of Romania’s (NBR) foreign currency reserves fell 481.3 million euros in May, as the central bank was forced to delve into its pockets more often last month in order to contain the ROL depreciation within acceptable limits and redeem the foreign currency notes issued by the Finance Ministry last year.

Under the circumstances, Romania’s foreign currency reserves had reached 5.28bn euros by the end of May, a level comparable to the one in the same time last year. Even though the foreign currency reserve decline may seem a negative signal at first, one look back at the statements of the central bank officials shows things have not got out of hand.

It has been clearly said ever since the beginning of the year there is no reason to keep the foreign currency reserves increasing at the same pace as in 2002, when they progressed by approximately $2bn, therefore a 700-800 million euro growth would suffice. The reserves calculated in euros amounted to 5.9bn euros at the end of 2002.

The trend of the foreign currency reserves will primarily keep up with the import growth pace and consider the coverage of the foreign private debt refinancing from banking sources.

The factors to have contributed to last month’s developments were the redemption of the foreign-currency denominated securities issued by the Finance Ministry on the domestic market (133.8 million euros), as well as the interventions on the forex market.

In order to contain the depreciation of the ROL, given the serious fluctuations on the international markets, where the euro gained ground against the dollar, NBR sacrificed 98.6 million euros in May.

May also registered payments worth 121.8 million euros in form of instalments and due interests for the direct foreign public debt secured by the Finance Ministry. oana.nuta@zf.ro