FX Reserves and IFEM Movements in August
NBS FX reserves stood at EUR 10,277.7 mn at end-August, covering 205% of money supply (M1) or six months’ worth of the country’s imports of goods and services (twice the level prescribed by the standard on the adequate level of coverage of imports of goods and services by FX reserves). In August, gross FX reserves rose by EUR 329.7 mn compared to end-July.
Net FX reserves (total reserves less banks’ FX balances on account of required reserves and other requirements) came at EUR 8,589.0 mn at end-August, up by EUR 310.0 mn from end-July, which is their highest level since 2000.
In August NBS FX reserves increased mostly as a result of NBS FX purchase interventions in the IFEM (inflow of EUR 275.0 mn). A boost also came from net FX inflows arising from foreign loan disbursements exceeding repayments (EUR 21.3 mn) and net inflows on other grounds (EUR 56.0 mn). All these inflows largely offset the negative effect of changes in cross-currency movements in the international financial market – the only item pushing down FX reserves in August (outflow worth EUR 22.6 mn).
Trading volumes in the IFEM amounted to EUR 589.4 mn in August, down by EUR 79.9 mn from the month before. In the first eight months of 2017, interbank trading volumes reached EUR 3,709.3 mn.
In August, the dinar appreciated against the euro by 1% in nominal terms, and the NBS intervened in the IFEM by purchasing EUR 290 mn in order to ease excessive short-term volatility of the exchange rate.