The foreign exchange reserves held by Romania’s National Bank (BNR) totaled EUR 34.12 billion at the end of March, EUR 1.7 bln less than one month earlier, according to data announced by BNR.

The forex inflows and outflows from BNR’s accounts were of particularly large magnitudes in March. Some EUR 3.25 bln entered BNR’s accounts in March, representing “the modification of the minimum reserves in foreign currency constituted by the credit institutions, the feeding of the accounts of the Ministry of Public Finance, the feeding of the European Commission account and others,” according to the central bank.

The outflows of funds in total value of EUR 4.95 bln accounted for “changes in credit institutions’ foreign currency-denominated required reserves, interest payments and principal repayments on foreign currency public debt, and other.”

During the month, the central bank released some EUR 700 million to local commercial banks by cutting the minimum required reserves by 2 pp to 6% and possibly the European Union disbursed significant funds.

The payments in the account of the public external debt during the month were only EUR 136 mln.

In principle, significant inflows can be generated by either BNR intervening on the foreign exchange market, or by the Ministry of Finance selling part of its forex buffer to finance the deficit.

Both would have the side effect of supporting the local currency from weakening versus the euro. 

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editor@romania-insider.com