The gross foreign currency transfers from abroad to Moldovan households increased by 2.5% y/y to €294mn in Q3, according to bne IntelliNews calculations based on central bank data. The pace of transfers decelerated from H1, when they advanced by 5.3% y/y.
The slower rise in transfers might help the central bank prevent further strengthening of the local currency: it remained steady versus the euro and weakened by 1.5% versus the US dollar during October.
In the rolling 12 months ending September, the volume of gross transfers increased by 4.6% y/y to €1.15bn (some 15% of the country’s GDP) and they financed roughly half of the net import of goods.
The robust currency transfers to Moldova have constantly exerted upward pressure on the local currency, posing competitiveness problems to local producers on both local and foreign markets. The country runs a deep trade deficit. But the central bank managed to increase its foreign exchange reserves as households seem to have used part of their savings to finance private consumption. Thus, the central bank’s foreign currency reserves increased by some €340mn to over €2.6bn over the past 12 months despite the deep external deficits. The reserves at Moldova’s central bank exceeded the $3bn threshold at the end of September.