​LEU'S DEPRECIATION IS CAUSED BY OBJECTIVE FACTORS, AS WELL AS BY SPECULATION AND PANIC - RIDHA TEKAIA

Exclusive interview to Infotag news agency by the President of Mobiasbanca Groupe Societe Generale, Ridha Tekaia.

Question: Mr. Tekaia, how grounded is the ongoing depreciation of the Moldovan national currency, the leu, versus the dollar and the euro? How much speculation and/or panic is here?

Answer: It is a little bit of both. Any such trend start is based on grounded facts and then it is slightly amplified by speculation or fear and rumors. We have today all ingredients added which make this time a severe fluctuation.

Q: In your opinion, what are the three key reasons that have led to the sharp devaluation of the leu in the past few months? Since the beginning of 2015, the leu has already lost 10% of its value to the dollar and 3% to the euro.

A: There are several reasons - the geo-political situation in the region, with the crisis in Ukraine and Russia, the depreciation of the Russian rouble and decrease of the oil barrel price. Additionally, remittances have a descending trend and locally you also have the seasonal factor with higher seasonal need for energy resources.

An important factor is the uncertain political situation in the country which slowdowns structural reforms and also international donors contribution. First of all, it is important to have a government – this will relaunch economic processes which lately have been put on standby. The new Government should have a real majority in Parliament in order to restart structural reforms which have to be done according to the DCFTA agreement.

Q: Should the state structures adopt a more liberal or a more conservative approach to this situation?

R.T.: For this kind of situation, the approach should be macroeconomic and global. Taking into account Moldova’s economic peculiarities, the international context should not be overlooked. The new government will have a difficult situation to solve, therefore, it will probably use all the possible instruments.

Infotag: As the saying goes: there is no evil without good. Is there any positive aspect in the depreciation of the leu?

A: Well, the devaluation of the national currency stimulates export and reduces import. So, at this moment, the situation has a positive impact for the few Moldovan companies making exports. They must improve the quality of their products and speed prospection of new markets. In parallel, I would expect from the Government to increase excises on non vital imports such as luxury items or products equivalent to the ones produced in Moldova in order to encourage consumption of locally-made products.

Q: Has the depreciation of the leu had an impact on the number of loans given by your bank? In what currency do clients prefer to take loans now?

A: It is too early to say, as we have recently returned from a long vacation. Anyway, most of the time, people, especially companies, take reasonably loans in the same currency as their incomes. Therefore, they should not be affected by leu depreciation. As a consumer protection measure, the government could ban all reference to any foreign currencies in all contracts established between Moldovan companies concerning goods present in Moldova such as rental agreement”, “real estate transactions”, “leasing contracts”, “goods imported by any distributor who must take the currency risk from his side". Then, we’ll see reasonable behavior as no space for speculation.

Infotag’s dossier: In 2014, Moldovan leu depreciation against the US dollar exceeded 20%, while to euro – 10%. Since 2015, leu depreciated against dollar by 10%, while against euro – by 3%.