FX Reserves and IFEM Movements in August
NBS FX reserves stood at EUR 11,325.7 mn at end-August, down by EUR 77.7 mn from end-July. This level of FX reserves covered 194% of money supply (M1) or around six 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). Compared to end-August 2017, gross FX reserves were up by EUR 1,048.0 mn.
Net FX reserves (FX reserves less banks’ FX balances on account of required reserves and other requirements) came at EUR 9,463 mn at end-August, down by EUR 78 mn from end-July.
The August reduction in FX reserves reflects the government’s effort to scale down the FX portion of public debt (thus changing the debt currency structure and reducing its overall size), with a view to mitigating the country’s exposure to FX risk. The outflows prompted by early and regular repayment of FX loans, maturing securities and other (EUR 340 mn net) were largely compensated for by the inflows from NBS interventions in the IFEM (purchases worth EUR 200 mn).
The net inflows from donations, FX reserves management and other grounds (EUR 70.2 mn) and a positive influence of market factors (EUR 12.1 mn) were more than sufficient to counterbalance the net outflows in respect of banks’ FX reserve requirements and other grounds (EUR 20 mn).
Trading volumes in the IFEM amounted to EUR 483.3 mn in August, up by EUR 21.4 mn from the month before. In the first eight months of 2018, interbank trading volumes reached EUR 4,658.4 mn.
In August, the dinar lost 0.2% against the euro in nominal terms. To ease excessive daily volatility of the exchange rate, the NBS intervened by buying EUR 190 mn.