The international reserves managed by the Romanian National Bank have exceeded the 10bn euro threshold, providing the country with credibility and contributing to a ratings upgrade, NBR Governor Mugur Isarescu stated.
Moreover, the head of the central bank says the current "optimal" level of international reserves warrants the "relative stability" of the exchange rate, without requiring additional efforts as it did in the past.
"When I say the reserve has reached an optimal level, I'm mainly considering relating to the import of goods and services; optimal means covering 3 to 6 months of imports. Optimal equally means comfortably relating to the service of the foreign debt. The level is optimal in both respects, although similarly important is the tendency of the international reserve to almost continually grow faster than imports," Mugur Isarescu stated.
The NBR's international reserves (foreign currencies plus gold) at the end of August exceeded 10bn euros for the first time. The foreign currency reserves stood at 9,331.5 million euros as a result of massive purchases of foreign exchange, and the gold reserve rose to 1,141.2 million euros. In terms of coverage of imports, this represents 3.9 months. By comparison, Bulgaria covers six month worth of imports with its 6.1bn euro reserve while the central bank of Poland manages 27.2bn euros, which covers 4.8 month worth of imports.
The NBR is currently managing a reserve that is worth about 18% of Romania's GDP and can generate significant revenue from profitable investments. The management of such a sum also involves significant costs, which the central bank's officials had been using as an argument up until about a year ago to explain why a certain caution in increasing the reserve was being exerted.
The constant increase in the foreign currency reserve, particularly since the beginning of the year, can also be regarded as the outcome of two constraints the NBR has had to address. Firstly, it has needed to cover the increasingly high monthly volume of imports as comfortably as possible. Secondly, it has had to temper the trend for the ROL's appreciation, even in nominal terms, given the large quantities of foreign currency that had to be drained from the market.
razvan.voican@zf.ro
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