The NBS Head Office Building was built from 1888 – 1890, on the basis of blueprints designed by Konstantin Jovanovic (Vienna 1849 – Zurich 1923), son to distinguished artist Anastas Jovanovic...
12/04/2022
Gross NBS FX reserves amounted to EUR 14,296.3 mn at end-March, down by EUR 1,265.2 mn from a month earlier. This level of FX reserves covers 131% of money supply (M1) and five months’ worth of the country’s import of goods and services, which is almost twice the level prescribed by the adequacy standard.
Net FX reserves (FX reserves less banks’ FX balances on account of required reserves and other grounds) came at EUR 11,577.7 mn, having decreased by EUR 1,370.2 mn from end-February.
The decrease in gross NBS FX reserves in March reflects mainly the NBS’s activity in the IFEM aimed at maintaining stability (EUR 1,160.0 mn). Other factors contributing to the decrease were net debt repayment by the government in respect of loans (EUR 161.6 mn) and other payments for government needs (EUR 45.3 mn in total).
Inflows to FX reserves came from the net allocation of FX required reserves of banks (EUR 89.2 mn), FX reserve management, grants, FX-denominated securities issued in the domestic financial market and other sources (EUR 24.1 mn net in total).
Net market effects were negative in the amount of EUR 11.6 mn.
Trading volumes in the IFEM amounted to EUR 522.5 mn, down by EUR 51.2 mn from February. In the three months of the year, trading volumes in the IFEM totalled EUR 1,627.3 mn.
In March, as since the beginning of the year, the dinar mildly depreciated against the euro in nominal terms (by 0.1%). In the past six months (since October 2021) the NBS stepped up its activity in the local FX market in order to maintain the necessary relative stability of the exchange rate amid unprecedented global uncertainty. To maintain relative stability of the exchange rate, the NBS sold EUR 1,170 mn net in March, the highest amount thus far, and EUR 2,115 mn since the beginning of the year.
Strong depreciation pressures, which from October 2021 to February 2022 stemmed mainly from the exceptionally high FX demand of energy importers and heightened global uncertainty over the Ukraine crisis, were additionally fuelled in March by the unprecedented and unreasonable (panic-driven) household demand for foreign cash. Despite clear messages from the NBS that the stability of the local FX market was not threatened (which the NBS has proven as well) and that there was no reason for excessive purchase of foreign currency, March saw a record high net purchase of foreign cash from banks in the amount of as much as EUR 692.5 mn, which only stoked further the depreciation pressures on the dinar. It was this factor, coupled with persistently high FX demand of the top three energy importers (EUR 503.2 mn), that made up the entire net FX demand in March, while all other factors had an almost neutral aggregate effect.
Looking at the past six months (October 2021–March 2022), net FX demand of the key energy importers amounted to EUR 2,146.3 mn, accounting for almost 90% of net FX demand of all resident companies.
Going forward, the NBS will continue to take timely and appropriate actions in order to safeguard stability of the local FX market.
Governor’s Office
