The cost of defending the RON? Romania’s forex reserves declined by EUR 1.1 bln in January

Sorin Melenciuc 01/02/2019 | 14:46

The foreign exchange reserves of the National Bank of Romania (BNR) declined in January 2019 by EUR 1.14 billion (3.5 percent) up to EUR 31.92 billion, after four months in a row of increase.

In January, the Romanian currency fell to all-time lows against the EUR and the main ruling party, PSD, and the Ministry of Finance suggested that the central bank should spend money from the forex reserves to defend the RON.

According to the BNR, there were inflows of EUR 1.57 billion in January representing changes in credit institutions’ foreign currency-denominated required reserves, inflows into the Ministry of Finance’s accounts, inflows into the European Commission’s account (EUR 970 million), and other.

In the same time, outflows amounted EUR 2.715 billion last month, representing changes in credit institutions’ foreign currency-denominated required reserves, interest payments and principal repayments on foreign currency public debt, and other.

“Interest payments and principal repayments on foreign currency public debt amounted to approximately EUR 1,037 million, of which principal repayments and interest payments on the euro denominated bonds issued by the Ministry of Public Finances came in at EUR 960 million,” the central bank said.

The foreign exchange reserves declined by EUR 4 billion between February and August 2018 but rose for 4 months in a row in September-December 2018.

The gold stock remained unchanged at 103.7 tonnes, but its value slightly rose to EUR 3.8 billon in November, according to BNR.

In February, the payments due on the forex public and publicly guaranteed debt amount to EUR 247 million.

Last Friday, the Ministry of Finance posted on its Facebook page a commentary saying that the central bank “is the institution that has to establish and supervise the observance of the currency regime and to develop the exchange rate policy.”

“For the application of the exchange rate policy, the NBR sets the exchange rates for its own foreign exchange operations and draws up the balance of payments and other papers on the international investment position of Romania,” the ministry said, in a moment when the Romanian currency suffered a steep depreciation against the major currencies.

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