FX Reserves and IFEM Movements in May
NBS FX reserves stood at EUR 10,883.3 mn at end-May, up by EUR 454.0 mn from end-April (up by EUR 1,391.1 mn from end-May of the previous year). This level of FX reserves covered 192% of money supply (M1) or more than five months’ worth of the country’s imports of goods and services (almost twice the level prescribed by the standard on the adequate level of coverage of the imports of goods and services by FX reserves).
Net FX reserves (FX reserves less banks’ FX balances on account of required reserves and other requirements) came at EUR 9,076.0 mn at end-May, up by EUR 451.0 mn from end-April, which is their highest level at the end of the month since 2000.
The increase in gross FX reserves in May mostly resulted from inflows from NBS interventions in the domestic FX market (purchase of EUR 220.0 mn). In an environment where a significant positive impact of market factors was recorded (EUR 177.3 mn), mainly the changes in cross-currency trends in the international financial market, the increase in FX reserves was also prompted by net inflows on account of donations, FX reserves management and inflows on other grounds (EUR 85.5 mn total), which exceeded significantly the outflows from FX reserves on account of net government repayment (of FX loans and securities) and FX required reserves (EUR 28.8 mn total).
Trading volumes in the IFEM amounted to EUR 513.9 mn in May, up by EUR 41.6 mn from the month before. In the first five months of 2018, interbank trading volumes reached EUR 3,262.7 mn.
In May, the dinar remained broadly unchanged against the euro, and the NBS intervened in the IFEM by purchasing EUR 220.0 mn in order to ease excessive short-term volatility of the exchange rate.