ECONOMIC COMMENTARY

In late August, one euro bought 1.4437 US dollars on foreign markets, whereas on 10 September,
it fell to 1.3659 against the dollar. Thus, in the first ten days of September, the euro weakened by
5.4 per cent against the US dollar. In summer, the euro exchange rate against the US dollar
oscillated between a maximum of 1.4666 (on 8 June) and a low of 1.3926 (13 July).
"The high instability of the single European currency had been triggered by a string of complex
factors. Firstly, the debates around the external debts and the insolvability risks of some
European Union member states have intensified. Secondly, the risks of slower economic growth
in the Euro Area have increased. Moreover, the financial situation of some banks in the euro area
have aroused many questions, along with the pressing need for their additional capitalization,"
the governor of the National Bank of Moldova (BNM), Dorin Dragutanu, has said. He added that
all together, these factors have affected the eagerness of the investors operating on the
international markets, which was born out by a sharp fall of European stocks.
For instance, in the first ten days of September, the German stock market (the greatest in the euro
zone) recorded a 10-per cent slump. Obviously, the investors favoured other currencies (in
particular the US dollars and the Swiss francs), while the euro swiftly depreciated. The overall
situation in the euro zone is very tense and uncertain, whereas the risks of some adverse
economic evolutions are very high.
The BNM governor said: "The National Bank establishes the official exchange rate of the
Moldovan leu against the US dollar. The official exchange rates of other foreign currencies are
set depending on their stock exchange quotation against the US dollar, on the international
market on that day."
The official exchange rate against the US dollar is established with regard to the purchase/sale
rates of the US dollar used by the banks in the operations with their clients, as well as with
regard to the exchange rates in the purchase/sale transactions on the Moldovan inter-banking
market on that day.
"Thus, if the euro falls against the US dollar, while the Moldovan leu is quite stable against the
US dollar, it means that the Moldovan currency consolidates against the euro," Dragutanu said.
Therefore, in the first 10 days of September, the Moldovan leu weakened against the US dollar
by 1.6 per cent (0.18 lei), while the euro consolidated against the US dollar by 5.4 per cent. Thus,
the Moldovan leu consolidated against the euro by 3.8 per cent (or by 0.63 lei).
The National Bank stated that in the latest period, the Moldovan leu exchange rate has been
floating, phenomenon determined by the demand and supply on the domestic currency market.
"In brief, this mechanism works in the following way. Moldovan enterprises need foreign
currency for imports. Export returns are lower than the minimal amount of foreign currency
needed by importers. The difference is covered by the offer of cash foreign currency provided by
private people at the exchange offices, since the exchange offices sell to the banks the foreign
currency purchased from people," the BNM said. For instance, in August the banks sold to
enterprises 350 million US dollars. At the same time, the population sold about 189 million
dollars via the exchange offices. The enterprises usually buy US dollars from banks, while the
population sells mainly euros.