NBR international reserves go up to 8.35b euros

National Bank of Romania’s reserves in May went up 245 million euros to 7.27bn euros. Adding the gold, valued at about one billion euros, NBR’s international reserves amount to 8.35bn euros.

The level matches the prudentiality limit, that is four months’ worth of imports. This year’s imports are estimated to 25bn euros, 20% higher than last year, according to the trend in the first four months. To sit comfortably at a 4.5 – 5 months of imports level, NBR should have 10bn euros in reserves.

The reserve increase dynamic is below the one in April, when NBR’s international reserves increased by 262 million euros.

The increase was slightly lower than in the month before, even though NBR bought 119 million euros’ worth more foreign currency that it did in April.

The explanation for this difference resides in the foreign debt payment peak in May. After having paid up to 50 million euros in April and March, the payments on the foreign public debt in May amounted to 138 million euros, 115 million euros more than in April.

This year’s foreign debt service reaches 852 million euros. The reserve increase in May was largely due to NBR’s foreign currency purchases from the forex market, which totalled 331 million euros. The central bank practically intervened on the market every day, purging the excess foreign exchange. Under the circumstances, the ROL/EUR rate rose from 40,297 ROL/EUR early in the month to 40,796 ROL/EUR on May 31, which accounts for an European currency appreciation of 1.2%.

All these purchases show foreign exchange is entering the Romanian market at a faster and faster rate. So that the central bank had plenty of foreign currency to buy last month, with the exchange rate showing signs of giving in to the pressure of the foreign currency surplus, whose origin everyone can only guess – the money sent by Romanians working abroad back home.

At the same time, there may also be smaller foreign investors entering the real estate market. Italians and Israelis already see the Romanian real estate market as likely to experience a boom in the future.

The only certainty last month was that the amount of foreign currency banks bought from clients was higher than what they sold to them. liviu.chiru@zf.ro