FX Reserves and IFEM Movements in July
NBS FX reserves stood at EUR 11,403.4 mn at end-July, up by EUR 299.0 mn from end-June. This level of FX reserves covered 200% of money supply (M1) or around 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 the imports of goods and services by FX reserves).
Net FX reserves (total reserves less banks’ FX balances on account of required reserves and other requirements) came at EUR 9,541 mn at end-July, up by EUR 224 mn in that month, which is their highest level since 2000.
The increase in gross FX reserves in July almost fully resulted from NBS activity in the domestic FX market (inflow of EUR 300 mn as a result of NBS FX purchase interventions). The influence of other flows (inflows and outflows) on FX reserves in July was almost neutral. Net inflows with respect to donations, FX reserves management and inflows on other grounds (EUR 81.7 mn total) and with respect to FX required reserves from usual bank activities (EUR 49.8 mn) fully compensated for the outflows arising from net government repayment of FX loans and securities (EUR 84.4 mn total), and offset the negative impact of market factors (EUR 48.1 mn).
Trading volumes in the IFEM amounted to EUR 461.9 mn in July, up by EUR 11.4 mn from the month before. In the first seven months of 2018, interbank trading volumes reached EUR 4,175.1 mn.
In July, the dinar remained broadly unchanged against the euro, and the NBS intervened in the IFEM by purchasing EUR 220 mn in order to ease excessive daily volatility of the exchange rate.